Skydance threatens to drop Paramount deal if Edgar Bronfman talks continue

David Ellison (left) and Jeff Shell

Skydance Media is threatening to terminate its US$8bn deal to buy Paramount Global if the Shari Redstone-controlled company continues to engage with new suitor Edgar Bronfman Jr.

A report in The Wall Street Journal (WSJ) revealed Skydance’s legal team sent a letter on Thursday alleging Paramount had breached the terms of the agreement when it extended the ‘go shop’ period by an additional 15 days and failed to notify Skydance it was doing so.

“Paramount has committed an incurable, material breach of the transaction agreement,” read the Skydance letter, which was sent to Paramount’s special committee, according to the WSJ.

“While Skydance is not currently exercising its right to terminate the transaction agreement, we reserve the right to do so in the future.”

The letter comes on the heels of Bronfman, the executive chairman of sports streamer Fubo, increasing his bid to US$6bn.

Edgar Bronfman Jr (photo: JD Lasica via CC)

On Wednesday night, Paramount issued a press release confirming it had received the offer and that it would extend the go-shop period. The 45-day window had initially been set to conclude on August 21, but Paramount said the receipt of Bronfman’s bid meant it could extend it in order to evaluate the offer.

Bronfman’s offer includes US$2.4bn in debt and equity for NAI, as well as a contribution of US$1.5bn to Paramount Global’s balance sheet, plus the US$400m fee required to break off the Skydance deal. It includes around US$1.7bn to give Paramount class B shareholders the option to cash out at a premium of US$16 per share.

The latest twist in the sale saga comes less than seven weeks after Paramount and Skydance made their deal official.

The following day, Skydance CEO and founder David Ellison and Jeff Shell, who will assume the role of president if and when the merger comes to fruition, outlined their future vision for the company, set to be called New Paramount.

Under the Skydance-Paramount deal, Skydance plans to invest around US$2.4bn to acquire Paramount Global’s parent company, National Amusements, for cash and US$4.5bn for the stock/cash merger consideration to be paid for publicly traded class A shares and class B shares. It will also invest US$1.5bn to help improve Paramount’s balance sheet.