Paramount Global and Skydance may have agreed in principle to an $8bn merger deal, however the former is allowed to pursue a better offer during a “go-shop” period that can be extended beyond August 21.
In a filing with the United States Securities And Exchange Commission on Thursday, days after the deal was announced, Paramount Global said the go-shop period can be rolled out to September 5 should it be engaged in talks with another entity that it believes would yield a “superior proposal”.
The filing confirmed Paramount Global would pay David Ellison’s Skydance and his bid partners a $400m termination fee in the event Paramount’s special committee decides to go with another offer.
The termination fee would also apply should Paramount Global and Skydance fail to close the transaction by April 7, 2025, subject to two automatic 90-day extensions, if all but regulatory approval has been cleared; or if a governmental authority issues a law blocking the merger.
The prevailing view appears to be that the merger will clear regulatory hurdles, however the outcome of the US presidential election in November may yet play a role. In general Democrats and Republicans adopt different idealogical stances on mergers and potential anti-trust matters.
On Wednesday Ellison and RedBird Capital managing partner Gerry Cardinale spoke to CNBC and emphasised the three incumbent co-CEOs at Paramount Global will be left to manage the company until the merger closes.
“[O]ne of the things that cannot transpire here is there can be no paralysis at the company,” said Ellison. “We have a tremendous amount of respect and admiration for the management team that currently exists at Paramount and they need to be able to explore and make decisions during this interim period”.
He continued, “There are conversations around what a licensing approach to international might look like as it relates to streaming; there have been incoming conversations around exploring what a joint venture might ultimately look like… all of those things need to be evaluated.”
Co-CEOs George Cheeks, Chris McCarthy, and Brian Robbins previously announced there will be $500m in cuts and they will explore joint ventures with regard to the company’s international streaming business.
Cardinale added, “We are embracing the entire portfolio. We’re not looking to break it up, we’re not looking to kill it. We’re looking to embrace it and transition it for a very pro-growth strategy.”
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