Edgar Bronfman Jr. dropped out of the bidding process for Paramount Global on Monday night, ending a months-long saga for control of the media giant. The pullout, barring any unforeseen issues or regulatory challenges, means Paramount will end up being acquired by David Ellison’s Skydance Media, whose $8 billion offer was approved by Paramount’s board last month.
So will end a torturous process to sell one of the jewels in Hollywood’s crown, Paramount Pictures, home to “Titanic” and “Interstellar,” home to the “Mission: Impossible” and “Transformer” franchises, but also the cradle of legendary films from “The Godfather” to “Forrest Gump” to “Rosemary’s Baby.”
“Tonight, our bidding group informed the special committee that we will be exiting the go-shop process,” Bronfman, a former Warner Music Group CEO and Universal Studios chief, said in a statement on Monday, while also congratulating Skydance. “It was a privilege to have the opportunity to participate.”
In the end, Bronfman’s last-minute bid, which he started organizing less than a month ago and took public less than two weeks ago, came too little, too late. “It came down to the clock,” an individual familiar with the Bronfman’s bid told TheWrap late Monday. On the heels of an on-again, off-again deal between Paramount and Skydance, the high stakes scramble was a reminder of how rare it is for a Hollywood studio to come onto the marketplace at all.
Members of Bronfman’s investor group, which included several high net-worth individuals — among them Hollywood producer Steven Paul and Paul Mitchell hair products co-founder John Paul DeJoria — were not comfortable with a process that required them to disclose financial statements to Paramount’s special board committee that has been evaluating takeover bids. They were concerned that their confidential information could have been leaked to the media, the individual said.
“At the end of the day, the time constraints we had and the fact that this confidential information was going to be shared with Skydance just spooked people,” the person said.
Bronfman has a long track record in the worlds of music and filmed entertainment, and did not intend to break up Paramount, as Wall Street analysts had long urged. Instead he sought to take over the entertainment giant and run it as a standalone public company. That would have avoided the plan to first take over Shari Redstone’s National Amusements Inc. and then merge it with privately held Skydance. That two-step process has bothered some investors who criticized the Skydance deal for prioritizing controlling shareholder Redstone over the rest of the company’s investor base.
Bronfman first submitted a $4.3 billion bid last Monday and then upped his offer to $6 billion two days later after several new investors reached out. He got in just under the deadline for a 45-day “go-shop” period to field competing offers set in Paramount’s merger agreement with Skydance. The special committee, after reviewing Bronfman’s sweetened offer, agreed to extend the go-shop period through Sept. 5 in order to consider it.
During the go-shop window, the committee contacted more than 50 third parties to determine whether they had an interest in making a proposal to acquire Paramount.
Bronfman and his investor group had planned to submit their final bid late Monday night, before deciding they simply didn’t have enough time, the person familiar with the situation said. Had Bronfman started organizing his bid earlier he could have turned to more private equity firms for capital, but they typically do substantial due diligence before committing capital. With such a tight window, he turned instead to wealthy individuals who could “move quickly,” the individual said.
Late Monday, Paramount’s special committee confirmed in a statement that it had closed down the go-shop period. “On behalf of the Special Committee we thank Mr. Bronfman and his investor group for their interest and efforts,” said Charles E. Phillips, Jr., chair of the special committee. “Having thoroughly explored actionable opportunities for Paramount over nearly eight months, our Special Committee continues to believe that the transaction we have agreed with Skydance delivers immediate value and the potential for continued participation in value creation in a rapidly evolving industry landscape.”
An uphill battle against the Ellisons’ deep pockets
Bronfman’s gambit needed to clear a high hurdle from the beginning. Despite criticism from shareholders that the Skydance deal would prioritize Redstone, whose National Amusements controls 77% of Paramount voting shares, he faced an uphill battle against the deep pockets of the Ellison family.
CEO David Ellison’s father, Larry Ellison, the Oracle co-founder and fifth-richest person in the world, has committed $6 billion into his son’s $8 billion bid to acquire Paramount, while the remainder is backed by RedBird Capital Partners.
Under the terms of the deal with Skydance, which is now expected to close in the third quarter of 2025, new Paramount will have an enterprise value of $28 billion, while Skydance is being valued at $4.75 billion. Class A shareholders can elect to receive $23 cash per share or 1.5333 shares of Class B stock of new Paramount.
Class B shareholders can elect to receive $15 per share or one share of Class B stock of new Paramount, which is subject to proration if those elections exceed $4.3 billion in aggregate. If shares are elected over cash, reducing the cash required to under $4.3 billion, the $1.5 billion of cash going to Paramount’s balance sheet could grow up to a cap of $3 billion.
The offer from Bronfman Jr., who is part of the wealthy Bronfman family of Canada that made their fortune by creating liquor company Seagram, included $2.4 billion to acquire NAI, $1.5 billion to pay down Paramount’s $14.6 billion in debt and a $1.7 billion tender offer that would give Paramount’s non-voting shareholders a cash-out option at a premium of $16 per share. The remaining money would have gone towards paying the $400 million break-up fee to Skydance.
Bronfman was offering Class A shareholders a choice of $24.53 per share in cash, a 7% premium compared to the $23 per share being offered by Ellison, or exchanging their shares for 1.5333 Class B shares. He also was looking to collapse Paramount’s current dual-share structure, shifting voter power to Class B investors, who currently have none.
Additionally, Bronfman said he would double Paramount’s adjusted earnings in the first year through a combination of $3 billion in permanent cost savings and the use of technologies to enhance Paramount’s capabilities, compared to $2 billion in cuts proposed by Skydance.
Paramount reported a market cap of $8.08 billion and stock price of $11.33 per share at the end of Monday’s trading session. Its stock has fallen 73% in the past five years, 23% in the past year and 21% year to date, but shares are up 2% in the past six months and 1.25% in the past month.
Bronfman wasn’t looking to break up Paramount
Bronfman’s initial offer, which TheWrap reviewed, was still light on details about what he planned to do to turn around struggling Paramount.
Out of the gate, the hastily organized offer stumbled a bit. Among the initial investor group of 19 individuals and entities, as TheWrap reported, were controversial figures like cryptocurrency mogul Brock Pierce and Kazakh investor Nurali Aliyev. Two days later, Pierce and Aliyev were dropped the group.
Bronfman did not intend to break up the company and sell off less-profitable assets like Paramount’s linear TV properties, a path that Wall Street analysts assumed would be the plan for private equity firm Apollo Global Management and Sony, which jointly offered $26 billion in cash to acquire Paramount, only to back away in mid-May.
“The intent was never to unwind it and sell off the parts,” the individual familiar with Bronfman’s offer said. “The belief was this was a great asset that we had the ability to bring back to life. It was about an investment in content, not about financial engineering.”
In its statement late Monday, Bronfman’s group said it continued “to believe that Paramount Global is an extraordinary company, with an unrivaled collection of marquee brands, assets and people. While there may have been differences, we believe that everyone involved in the sale process is united in the belief that Paramount’s best days are ahead.”
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