Another party has entered the Paramount merger and expected to put in a bid.
👉 Background: Paramount is one of the oldest American film production and TV company in Hollywood. Last month, after a lot of back and forth, Paramount agreed to merge with Skydance Media in a $28 billion USD deal.
👉 What happened: Now, another party has entered the mix and is expected to put in a bid to buy Paramount. This mystery person is Edgar Bronfman Jr, the ex-CEO and Chair of Warner Music Group. And this news sent Paramount's share up 7%
👉 What else: To get the deal over the line, Bronfman’s framing his deal as being a better offer for shareholders because it won’t dilute the holdings of current shareholders as much as Skydance.
💡Share dilution happens when a company issues new stock, which reduces the the percentage owned by current shareholders. Shares can be diluted for a number of reasons, including to fund a merger or acquisition.
💡If you own 50 shares in a company with a total of 100 shares (or 50% ownership), and the company then issues 100 more shares, you now only own 50 shares out of 200, (or 25% ownership). So each share is now worth less.
💡Paramount had agreed Skydance would invest $8 billion USD into it and merge the two companies’ shares, which would reduce the stake of existing shareholders. But if Bronfman goes ahead with his bid, which offers shareholders more ownership, it could leave Skydance in the dust.
Sign up for Flux and join 100,000 members of the Flux family
