Media mogul Edgar Bronfman upped the ante on his offer to buy Paramount, in an attempt to gain the upper hand in a bidding war with Skydance Media. Initially, Bronfman matched Skydance’s $4.3 billion offer to acquire Paramount’s parent company National Amusements, and this week he increased that offer to $6 billion.
This new proposal was intriguing enough to Paramount’s special committee, that it chose to extend the 45-day “go-shop” period by an additional 15 days to give enough time to the new offer. Bronfman maintains that his proposal is superior to Skydance’s because it provides a larger payout to Paramount shareholders, a point of some tension throughout negotiations with Skydance.
The Skydance deal would result in nonvoting Paramount shareholders receiving $15 per share, a significant premium over the current trading price of $11.16 per share, but lower than the heights that company shares had seen at points over the past three years. Bronfman is offering to pay $16 for each nonvoting share, setting up a bidding war between Bronfman and Skydance CEO David Ellison.
Ellison has access to deep pockets to finance his bid, including private equity firm Redbird Capital and his father, Oracle CEO Larry Ellison. Ellison may choose to match Bronfman’s offer, as Skydance retains the right to counter any offer made during the “go-shop” period.
However, Ellison accuses Paramount of violating the terms of this “go-shop” period by entertaining the new offer. Word on the street is that most Paramount insiders prefer the offer from Skydance, hoping that a Skydance ownership is the result of the extended process.