February 7, 2025
The Paramount merger has been thrown into doubt by an unexpected $13.5 billion bid and legal threats that have just emerged in the sudden turn of events. The previously planned acquisition of Paramount Global by Skydance Media and RedBird Capital Partners has been thrown into doubt by a last-minute bid from a consortium of investors known as Project Rise Partners (PRP). Skydance and RedBird recently proposed an $8 billion deal, but PRP's new offer, valued at $13.5 billion, dwarfs that proposal.
A spokesperson for Paramount's Special Committee said: ’The transaction agreement between Paramount and Skydance Media allowed the Special Committee to pursue a superior proposal during the now-expired 45-day go-shop period, during which representatives of the Special Committee contacted more than 50 third parties to determine whether they were interested in making a proposal to acquire Paramount. Project Rise Partners did not make a proposal during this period or during the previous seven-month sale process for Paramount. It is unclear what PRP's objectives are; however, Paramount is bound by its agreement with Skydance Media and there will be no engagement with PRP in contravention of that agreement’.
Project Rise Partners' all-cash offer includes $19 per share for Paramount's Class B stock, 75% more than Skydance's offer, and a $2 billion boost to the company's balance sheet. According to a report in Variety, the consortium claims its offer is "vastly superior" to the Skydance deal and would deliver greater value to shareholders.
The identities of most of the investors in PRP remain largely shrouded in secrecy. So far, only Daphna Edwards Ziman and Moses Gross have been identified as key figures, but some sources suggest the group includes industry titans comparable to Larry Ellison, with at least one of the world's richest individuals and a pioneer of the satellite industry involved. Project Rise Partners claims that Paramount's special committee charged with evaluating bids did not consider its previous $8.5 billion offer. They say this is a breach of its fiduciary duty to shareholders. PRP's legal letter highlights concerns about the valuation of the Skydance deal and potential regulatory hurdles.
The Skydance-RedBird deal has been criticized for valuing Skydance at around $4 billion, despite the company's relatively low revenues. Concerns have also been raised about the involvement of Tencent, a Chinese company with links to the military, which would hold a small stake in the merged entity. Paramount and its controlling shareholder, National Amusements Inc, have a binding agreement with Skydance. However, PRP's legal letter argues that Paramount's board has excluded the option of considering higher bids, potentially harming shareholders' interests.
What's happening now is that the bidding war has created uncertainty about the future of Paramount Global. While the Skydance deal faces regulatory challenges and shareholder concerns, Project Rise Partners' offer represents a compelling alternative. At this time, the Paramount Board must carefully consider its options and determine the best course of action for the company and its shareholders. In summary, Paramount could be in real trouble. They had a well thought out plan for the future, but PRP's offer raises real concerns about the Skydance deal. We will have to wait and see the outcome of PRP's legal action, which will give us some answers about Paramount's future prospects.
#SzymonKarbowski #StreamVX #videostreaming #ParamountGlobal #SkydanceMedia #Paramount #merger #RedBirdCapitalPartners #ProjectRisePartners #PRP
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