Even after closing a deal with Skydance Media, Paramount Global has the right to shop around for a better offer within a 45-day period. But if Paramount agrees to accept a more attractive buyout deal, it would have to pay Skydance a breakup fee of $400 million, Skydance founder and CEO David Ellison told investors on a call Monday morning.
In agreement with Skydance and financier RedBird Capital Partners, the special committee of Paramount’s board of directors will have a 45-day go-shop period during which it will be allowed to “actively solicit and evaluate alternative acquisition proposals.” According to Paramount, it “does not intend to make public developments relating to the go-shop process unless and until it determines that such disclosure is appropriate or otherwise required.”
The ‘go-shop’ provision of the deal was agreed to by the Skydance team in lieu of approval by Paramount Global’s non-voting shareholders on the deal. The 45-day period is ostensibly intended to minimize the threat of shareholder litigation against Paramount’s board of directors and Shari Redstone’s National Amusements Inc., which owns the controlling voting interest in Paramount, by demonstrating that they are making good faith efforts have taken to maximize the value of the shares. any merger and acquisition transaction.
The $400 million breakup fee is “unusually high” for a deal of this size and “would lend credence to shareholders’ contention that the go-shop provision does not protect shareholders who claim Redstone gains the upper hand,” Erik said. Gordon, a professor at the University of Michigan’s Ross School of Business.
Also on a call with investors Monday, Jeff Shell, chairman of RedBird Sports & Media and former CEO of NBCUniversal, said the Skydance team has identified more than $2 billion in annual cost savings, including more than $1 billion in the first year. Shell is expected to become president of the ‘New Paramount’ once the deal is completed, expected in the first half of 2025.
Under the two-step Skydance-Paramount deal, Skydance Redstone’s National Amusements Inc. acquire, which has a 77% controlling interest in Paramount; subsequently, Skydance will merge with Paramount Global. The Ellison family and RedBird Capital said they will invest up to $6 billion in the “New Paramount.”
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