Pity for Paramount common shareholder

What else is there? Paramount Global investors may have a chance to change the channel. Seagram’s liquor heir Edgar Bronfman Jr. has emerged to eclipse tech heir David Ellison’s $8 billion bid for the U.S. media group. The key to victory is winning over majority shareholder Shari Redstone, though other voting shareholders can make their voices heard. Lost in the shuffle is the stark reality of non-voting investors.

From Bronfman burst in the door It’s the latest twist in a long-running saga. After potential partners like Warner Bros Discovery and buyout firm Apollo Global Management backed out, Ellison’s Skydance Media sealed a deal two-step fusion In July, Skydance will acquire National Amusements from Redstone, which has voting control, and then merge with Paramount, which includes a movie studio, the CBS network and cable networks such as MTV.

That deal included a “stock sale” clause, allowing other potential buyers to participate. Bronfman has submitted an offer that values ​​NAI’s equity at $1.75 billion, matching Skydance. Like Ellison, he plans to inject $1.5 billion into Paramount’s balance sheet, perhaps in exchange for more capital. Behind him is a group of investors, including “Superbabies” producer Steven Paul and “Mighty Ducks” actor Brock Pierce, now chairman of the Bitcoin Foundation.

This is likely just an open gesture on Bronfman’s part, who may increase your offer For now, though, his selling point is simplicity: His deal leaves Paramount as is. That might take a fly out of the ointment. After replacing the paid-off debt, both offers imply a per-share value of $27.55 for Redstone’s voting and nonvoting stock, ignoring a small chain of movie theaters that NAI owns. Under Ellison’s offer, other holders of Class A shares with governance rights get $23 each. Investors such as Mario Gabelli have criticized the discrepancy and could take the matter to court.

For non-voiced Class B shareholders, the picture is mixed. Skydance offered $15 in cash, though only for about half of its shares. To get it, Paramount will acquire Skydance at a price of 13.9 times 2025 EBITDA, even after more than 100,000 shares have been sold. Cost savings promisedmore than double Paramount’s current multiple. There’s no clear reason why the combined company would suddenly command a generous valuation. Class B shares were trading at about $11 before news of Bronfman’s offer broke.

They have since fallen back, albeit slightly, after plunging a quarter since the start of the year and amid several deal machinations as strategic challenges mount. For investors stuck in Paramount common stock, flipping through the M&A channels can do little to resolve them.

Context news

Media executive Edgar Bronfman Jr. has submitted a bid for National Amusements, the Redstone family investment vehicle that controls U.S. entertainment group Paramount Global, according to a Wall Street Journal report citing people familiar with the matter on Aug. 19. Bronfman, whose family once owned the Seagram liquor empire, is teaming up with high-net-worth individuals including movie producer Steven Paul. NAI and Paramount had previously agreed to a deal with tech scion David Ellison and his film production firm Skydance Media. The $8 billion transaction made in July includes Skydance’s merger with Paramount, the owner of the CBS television network, cable channels such as MTV and the Paramount Pictures movie studio, as well as the acquisition of NAI. That deal contained a 45-day “go-shop,” during which the seller can hire other suitors, that ends Aug. 21.

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