Skydance Media Claims Paramount In Breach of Deal

Skydance Media is accusing Paramount’s special committee of directors of breaching the terms of its deal by extending the period when it can engage with other bidders for the company, according to a letter viewed by The Wall Street Journal.

“While Skydance is not currently exercising its right to terminate the Transaction Agreement, we reserve the right to do so in the future,” Skydance’s attorneys wrote in the letter, which was sent Thursday.

Edgar Bronfman Jr.

Paramount on Wednesday extended the “go shop” period—a window during which the committee can solicit and review bids—until Sept. 5, after it received a $6 billion deal proposal from Edgar Bronfman Jr. for Shari Redstone’s National Amusements, her family company that controls Paramount, and a stake in Paramount. The “go shop” period was originally slated to expire at the end of Wednesday.

Under the terms of the deal with Skydance, the special committee had to decide if Bronfman’s bid “is or would reasonably be expected to lead to a superior proposal,” relative to Skydance’s offer. Skydance is arguing that the bid wasn’t superior, as defined in the transaction agreement, and thus the committee shouldn’t have extended the window.

Additionally, under the terms of the agreement, the special committee was supposed to inform Skydance that it was extending the go-shop, which it failed to do, according to the letter.

Skydance says that by not halting all negotiations with Bronfman’s team by the end of Wednesday, “Paramount has committed an incurable, material breach of the Transaction Agreement,” and the committee should request for the return or destruction of all deal-related information back from Bronfman’s group.