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Edgar Bronfman Jr has raised up to $5.5bn to sweeten a last-minute offer for Paramount and gatecrash the Hollywood company’s agreed deal with Skydance Media, according to people with knowledge of the matter.
The billionaire media investor made an initial $4.3bn bid on Monday night before Wednesday’s expiration of Paramount’s 45-day “go shop” period, according to four people with knowledge of the move and a copy of the offer letter seen by the Financial Times.
But the former Warner Music chief executive intends to improve those terms in the coming days after securing more commitments from a broad group of investors, two of those people said.
According to people close to the matter, Bronfman has secured commitments from investors including Fortress, which is majority owned by Abu Dhabi’s Mubadala investment arm.
Other backers include private investment group BC Partners Credit, film producer Steven Paul, crypto entrepreneur Brock Pierce and Nurali Aliyev, the tech entrepreneur and grandson of the autocratic former ruler of Kazakhstan, these people said.
Bronfman, Skydance, Fortress and BC Partners Credit declined to comment. Paramount, Paul, Pierce and Aliyev could not immediately be reached for comment.
Bronfman’s group is still pursuing further funding, one person familiar with the matter said.
The decision to take on foreign investment is likely to attract the attention of the Committee on Foreign Investment in the US, the multi-agency body known as Cfius that vets deals for national security risks. Paramount owns CBS News, which has some potential restrictions related to foreign ownership.
In a letter to a special committee of Paramount directors on Monday, Bronfman’s investor group said its offer “represents a much more favourable outcome for Paramount stockholders and creates a far more viable public company than the Skydance deal”.
“Our proposal eliminates the risks, uncertainties and costs of combining Paramount with Skydance,” the letter added. However, it did not explain how Bronfman’s group planned to address potential Cfius concerns.
It was also unclear how receptive the special committee, chaired by director Charles Phillips, would be to the new offer. Several people, including former and current board members, said that Phillips had in the past tried to torpedo Skydance’s deal.
Bronfman’s move is the latest twist in a long battle over the 98-year-old Paramount Pictures studio. The last big studio left in Los Angeles’ Hollywood district produced cinema classics such as The Godfather and Titanic.
Skydance, the film studio founded by billionaire David Ellison, had agreed to a deal with Paramount in July but had given the Hollywood group until August 21 to entertain a higher offer.
The Skydance deal offered more than $8bn to acquire Paramount. It said it would first pay $2.4bn to buy out Shari Redstone’s National Amusements, which controls 80 per cent of the votes at Paramount despite owning only about 10 per cent of the company through a special type of voting shares.
Following this, Skydance would combine with Paramount in a $4.5bn deal in which it would offer $15 a share to buy out up to half of the non-voting stock, and inject $1.5bn into Paramount’s balance sheet.
The initial Bronfman offer values NAI, the Redstone family holding company that has controlled Paramount since 1994, at $2.4bn including debt, the people said. NAI also declined to comment.
Bronfman, the 69-year-old heir to the Seagram spirits family that once controlled Universal Studios and PolyGram, also offered to match Skydance’s planned $1.5bn injection into Paramount and pay Ellison’s company $400mn to terminate its existing deal, they added. But his initial bid lacked any clear offer for Paramount’s non-voting shareholders.
But Bronfman is planning an improved bid that is likely to offer better terms for Paramount’s non-voting shareholders, according to people with direct knowledge of the talks.
Bronfman is being advised by Perella Weinberg Partners, UBS and Rockefeller Capital Management on the financial terms of the deal, according to the offer letter, while Skadden is providing legal advice.
Skydance, which is backed by US private equity group RedBird Capital and David Ellison’s father, Oracle co-founder Larry Ellison, is likely to argue that Bronfman’s bid leaves nothing for Paramount’s shareholders, while giving him full control.
Bronfman’s rebuttal is expected to be that his offer will dilute Paramount’s existing shareholders less than under Skydance’s proposal.
The Wall Street Journal first reported Bronfman’s $4.3bn offer on Tuesday.
