Paramount has laid out some terms of its planned merger with David Ellison’s Skydance, including what happens if another bidder appears.
The deal includes a so-called “go shop” period during which other interest parties can submit offers. It runs for 45 days from the announcement of the deal, which was unveiled late Sunday night. The company said Thursday that the go-shop runs through 11:59 p.m. ET on August 21 and can be extended through September 5 if good-faith talks are underway for a better offer.
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“If the Company is engaged in the aforementioned activities with any third parties that contacted the Company and made an alternative acquisition proposal during the go-shop period that the Company Special Committee has determined in good faith is or would reasonably be expected to lead to a Superior Proposal … then the Company may, prior to the No-Shop Period Start Date, extend the go-shop period and the No-Shop Period Start Date until September 5, 2024, in order to continue to engage in such activities with such third parties upon written notice to Skydance,” according to an SEC filing posted today.
The deal calls for Skydance to acquire National Amusements, the Redstone family holding company that control Paramount, for $2.4 billion in cash. That puts the David Ellison company at the helm. Paramount will then absorb Skydance in an all-stock transaction valuing Skydance at $4.75 billion, merging the two companies.
NAI owns about 80% of Class A voting shares. To appease other public shareholders, Skydance and its backers including billionaire Oracle co-founder Larry Ellison and RedBird Capital have offered to acquired all other outstanding voting shares for $23 each, and a prorated chunk of the non-voting Class B shares for $15 apiece up to a cap of under $4.3 billion. The buyers will also invest $1.5 billion in Paramount.
If the other Class A holders, fund manager Mario Gabelli the largest, do not take the cash from Skydance, they will receive the equivalent of 1.5 Class B voting shares for each Class A share. In other words, only Skydance will hold Class A voting share from then on.
The filing, which includes the official transaction agreement, says Paramount is subject to certain restrictions in its ability to solicit alternative acquisition proposals from third parties, to provide non-public information to third parties and to engage in discussions with third parties regarding alternative acquisition proposals. There are also some restrictions on business agreements but management still has some latitude on day-to-day operations. Details of that are confidential.