Paramount shares fall after Edgar Bronfman Jr.’s surprise exit from the bidding war

Shares of Paramount Global sank after Edgar Bronfman Jr. abruptly abandoned a $6 billion takeover bid for the media giant amid growing questions about how it would finance the deal.

Shares of the company, home of Paramount Pictures, CBS and MTV, fell more than 6% in midday trading on Tuesday after Bronfman made an abrupt exit from the race – a day before the deadline to submit a final offer.

Bronfman’s bidding group notified a special committee of Paramount’s board of directors late Monday that it would pull out, clearing the way for David Ellison’s Skydance, which reached an $8.4 billion merger deal with Paramount in July.

Part of that deal included a “go-to-shop” window that allowed Paramount to seek other buyers, so Bronfman and his group of investors emerged as a contender.

According to The New York Times, Bronfman’s pursuit appeared to have lost steam over the past week as Paramount and its parent National Amusements considered the offer.

Sources told The Times that some people involved in the deal were skeptical that Bronfman, an heir to the Seagram liquor fortune and former head of Warner Music Group, would be able to secure financing for his $6 billion bid. dollars at a time.

Last week, days before a crucial deadline, Bronfman filed 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 was not part of the final bidding group, which raised its offer to $6 billion in recent days to buy a controlling stake in National Amusements and a minority stake in Paramount.

However, institutional investors such as Fortress Investment Group and BC Partners Credit were part of Bronfman’s final group.

Sources said Bronfman did not provide Paramount’s advisers with detailed evidence that his investors had enough capital on hand for the deal.

The Times said some of the backers were concerned about providing detailed financial statements during due diligence.

The tight deadline on the go-to-store process also put the kibosh on Bronfman’s bid.

With the deadline approaching and Paramount’s advisers focused on securing financial documentation, the executive finally relented and informed the special committee that he was withdrawing from the process.

Now, Skydance appears to be on its way to a deal with Paramount, which has been in the hands of the Redstone family for decades, since the company was joined by its late patriarch Sumner through a series of deals.

The deal, which is expected to close in 2025, will put the company in the hands of Ellison, the 41-year-old son of Oracle’s billionaire founder Larry Ellison, who is backing Skydance’s bid for Paramount.