Paramount Shares Drop in Takeover Bid

Paramount Global (PARA) shares fell by over 5% early Tuesday following the company’s announcement that its “go-shop” period had officially ended, effectively clearing the path for Skydance Media to acquire the media giant.

The drop in stock price came after billionaire Edgar Bronfman Jr. withdrew from the race to purchase Paramount late Monday, leaving Skydance as the likely new owner.

The announcement from Paramount all but confirms that Skydance Media, known for its work in film and television production, will take control of the illustrious entertainment company. This marks the culmination of years of speculation surrounding the future of Paramount, which is controlled by Shari Redstone through her family’s holding company, National Amusements (NAI).

“Having thoroughly explored actionable opportunities for Paramount over nearly eight months, our Special Committee continues to believe that the transaction we have agreed with Skydance delivers immediate value and the potential for continued participation in value creation in a rapidly evolving industry landscape,” said Charles Phillips, chair of Paramount’s special committee, in a statement.

Bronfman, heir to the Seagram spirits fortune and current executive chairman at FuboTV (FUBO), had submitted a last-minute bid earlier this month. His proposed $6 billion takeover of National Amusements threatened to disrupt the approximately $8 billion agreement Paramount had already reached with Skydance just a month prior. However, Bronfman encountered difficulties securing the necessary financing for his bid, which reportedly involved investors such as Fortress and BC Partners Credit. These financial hurdles led to his early withdrawal from the process.

“We continue to believe that Paramount Global is an extraordinary company, with an unrivalled collection of marquee brands, assets, and people,” Bronfman stated after stepping back from the bid.

With Bronfman out of the picture, the Skydance transaction is expected to proceed, with the deal anticipated to close in the first half of 2025, subject to regulatory approval. The all-stock deal will value Skydance at $4.75 billion. As part of the agreement, Skydance has committed to injecting $6 billion in cash into Paramount, with $1.5 billion earmarked for reducing the company’s significant debt.

David Ellison, CEO of Skydance, will take on the roles of chairman and CEO of the combined company. Former NBCUniversal executive Jeff Shell, who was ousted from his previous role last year following an internal investigation, will serve as president under the new leadership structure.

Last month, this leadership team outlined their strategic vision for Paramount’s future, which includes $2 billion in cost cuts. Of this, $500 million in reductions are already underway. The plan aims to streamline operations and stabilise the company’s finances amid challenging market conditions.

Paramount’s recent financial performance has been under pressure, with the company reporting a sharper-than-expected slowdown in its linear TV business earlier this month. This was accompanied by a nearly $6 billion write-down on the value of its cable unit, further highlighting the challenges faced by the media giant. In response to these difficulties, Paramount announced plans to lay off 15% of its US workforce by the end of the year, following the elimination of around 800 positions in February.

As the media industry continues to evolve, the acquisition of Paramount by Skydance represents a significant reshuffling of assets and leadership within the sector. The deal promises to reshape the future of Paramount, a company with a rich legacy, but now facing the pressures of modernisation and financial restructuring.