Skydance accuses Paramount of breach of contract

Another day, another twist in the Paramount saga. Skydance Media is accusing Paramount’s special committee of directors of violating the terms of their merger agreement by extending the deadline for soliciting and reviewing alternative bids, according to a letter obtained 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.

“Bronfman’s sweetened bid is not superior”

Skydance argues that Bronfman’s revised bid of $6 billion for National Amusements and a minority stake in Paramount is not superior to their own offer of approximately $8 billion.

The letter states that Paramount’s failure to halt all negotiations with Bronfman’s team by the end of Wednesday constitutes a “material breach” of the transaction agreement. Skydance is demanding that the special committee return or destroy all deal-related information provided by Bronfman’s group.

Bronfman and the Paramount special committee have declined to comment on the matter.

Its financing is “highly contingent and uncertain.”

Skydance’s deal with Paramount involves buying National Amusements and merging Skydance into Paramount. The deal would put $1.5 billion on Paramount’s balance sheet to pay down debt and provide more than $4 billion to buy out about 50% of nonvoting Paramount shares.

Bronfman’s revised bid includes a tender offer that would give non-Redstone, nonvoting Paramount shareholders an option to cash out at a premium of $16 a share.

Skydance argues that their deal would allow them to buy more shares from these non voting stockholders than under Bronfman’s revised bid. In addition to financial considerations, Skydance asserts that Bronfman’s financing is “highly contingent and uncertain.”