Paramount Global’s stock sank after Edgar Bronfman Jr. abruptly abandoned a $6 billion takeover bid of the media giant amid growing questions about how he would finance the deal.
Shares of the company, home to Paramount Pictures, CBS and MTV, fell more than 6% in midday trading on Tuesday after Bronfman made a surprise exit from the race — one day before the deadline to submit a final offer.
Bronfman’s bidding group notified the special committee of Paramount’s board of directors late Monday that it would drop out, clearing the way for David Ellison’s Skydance, which reached an $8.4 billion merger agreement with Paramount in July.
Part of that deal included a “go shop” window that allowed Paramount to seek other buyers, which is how Bronfman and his group of investors emerged as a contender.
According to The New York Times, Bronfman’s pursuit appeared to lose steam over the last week as Paramount and its parent National Amusements scrutinized the bid.
Sources told The Times that some people involved in the deal were skeptical that Bronfman, an heir to the Seagram’s liquor fortune and former boss of Warner Music Group, would be able to secure financing for his $6 billion bid in time.
Last week, days before a crucial deadline expired, Bronfman submitted a proposal to take a controlling stake in Paramount for $4.3 billion with a group of backers that initially included cryptocurrency entrepreneur and former “Mighty Ducks” actor Brock Pierce.
Pierce wasn’t part of the final bidding group, which raised its offer to $6 billion in recent days to acquire a controlling stake in National Amusements and a minority stake in Paramount.
Institutional investors such as Fortress Investment Group and BC Partners Credit, were part of Bronfman’s final group, however.
Sources said that Bronfman did not provide Paramount’s advisers with detailed evidence that his investors had enough capital on hand for the deal.
The Times said that some of the backers were skittish about providing detailed financial statements during due diligence.
The tight deadline on the “go shop” process also put the kibosh on Bronfman’s bid.
With the deadline looming and Paramount’s advisors focused on securing financial documentation, the exec finally threw in the towel and informed the special committee he was dropping out of the process.
Now, Skydance appears to be on the path to sealing the deal with Paramount, which has been in the hands of the Redstone family for decades, ever since the company was cobbled together by its late-patriach Sumner, through a series of deals.
The deal, which is expected to close in 2025, would put the company in the hands of Ellison, the 41-year-old son of billionaire Oracle founder Larry Ellison, who is backing Skydance’s bid for Paramount.
