Skydance Media is urging Paramount Global to stop considering a proposal by an investor group led by Edgar Bronfman Jr. to buy control of the company, threatening to withdraw its own merger offer
In a letter from its lawyers on Thursday, Skydance told the committee of Paramount’s board of directors formed to steer the M&A process that it had breached the terms of a merger agreement the two companies announced last month.. The deal includes a “go-shop” provision allowing the committee to pursue a potentially “superior” offer. It did so by entertaining the Bronfman-led bid and then extending the go-shop by 15 days, through September 5. It originally was scheduled to expire on Wednesday night.
Skydance contends that Bronfman’s bid, which would see the media veteran and Seagram heir as well as nearly two dozen backers put in about $6 billion, is inherently not superior to Skydance’s proposal. The David Ellison-run Skydance plans to invest $8 billion and fully merge the two companies, bringing animation, film and TV production and other assets to the newly combined entity. Bronfman, meanwhile, would acquire National Amusements Inc., which has a controlling stake in Paramount, and then take a minority interest in Paramount Global . That structure, Skydance believes, offers little opportunity for cost savings or efficiencies, making it an inferior scenario.
In addition, Skydance believes that the committee did not provide adequate notification that it was planning to extend the go-shop and consider the Bronfman bid.
The Wall Street Journal had the first report on the legal salvo. Multiple sources familiar with the merger discussions confirmed details of the communiqué to Deadline.
Reps for the special committee and Skydance did not immediately return calls for comment. A rep for Bronfman declined to comment.
“While Skydance is not currently exercising its right to terminate the Transaction Agreement, we reserve the right to do so in the future,” Skydance’s attorneys wrote.
Bronfman’s offer “is significantly less favorable to the Paramount stockholders from a financial point of view,” the letter continued, noting that Bronfman is offering a much smaller buyout of non-voting, Class B shares. Since the merger discussions first began late last year, the ultimate result of a deal for Class B shareholders has been a major point of contention, with the threat of shareholder lawsuits forcing multiple revisions of Skydance’s bid. Having apparently quelled most of those legal threats as spring turned to summer, the company has now opened up a potential new arena of legal conflict.
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