Make way for Relativity Media. The television and film studio is trying to scoop up YouTube multi-channel network Maker Studios from Disney with a last-minute bid worth up to US$1.1 billion.
Relativity amended the deal Monday morning after initially offering US$500 million plus US$400 million, if financial targets are met, and an additional $100 million in bonuses for key YouTube talent and execs.
A source familiar with the deal says the new offer, made at about 7:30 a.m. PST, is now US$525 million in cash and stock, plus a potential US$500 million in cash and stock if certain financial targets are met. Relativity is still sweetening the deal with an additional US$75 million bonus pool that would be available to YouTube talent within Maker’s network as well as key Maker executives. The bonus offer (in stocks) is guaranteed, not contingent on performance targets, the source confirms. It’s meant for people who have been critical to the success of the company, but aren’t existing stockholders.
This would put the offer just slightly above Disney’s bid of up to US$900 million, which is scheduled to be voted on by shareholders on Tuesday.
“Relativity’s proposal fully values Maker Studios while providing its shareholders far more upside potential for growth than the Disney offer. Our offer also includes a substantial opportunity for Maker’s talent and employees to directly and significantly participate in the long-term growth of Relativity should the transaction be completed,” the company says in a statement.
“Relativity and Maker Studios are natural partners. We both share a commitment to challenging the status quo, breaking down old models that don’t work and inventing new ones that do. We are confident the Maker Studios board and its shareholders will recognize the full value of the Relativity offer.”
Barclays and Jefferies are Relativity’s bankers on the deal.
Last week, former Maker CEO Danny Zappin and three other co-founders filed a lawsuit in an attempt to thwart the Disney sale.
In the filing, they allege that the details of the sale presented to Maker shareholders are “defective and misrepresent and omit material facts necessary for Maker’s shareholders to make an informed merger vote.” Disney is not named in the suit.
The alleged missing details relate to a June 2013 lawsuit filed by the plaintiffs, which also include Maker co-founders Scott Katz, Derek Jones and Will Watkins.
In the original suit, the plaintiffs allege that, “motivated by greed and unfazed by the illegality or repercussions of their actions,” members of the board, including current executive chairman Ynon Kreiz, “conspired …to use their power to line their pockets with Maker’s assets,” to deny then-CEO Zappin of all his powers and “gut the rights” of common stock shareholders and take control of the company.
In the Thursday filing, the plaintiffs allege that when providing info to shareholders about the sale “certain Maker directors illegally issued shares to themselves and diluted common stock for their own financial gain to the detriment of Maker shareholders and take control of Makers’ board so that they could rapidly create a ‘liquidity event’ so that they could sell Maker and obtain significant returns on their investments irrespective of the best interests” of the company and its shareholders.
Zappin is no stranger to controversy. In 2012, Ray William Johnson, star of the YouTube hit Equals Three, publicly called out Zappin and other Maker execs for allegedly pressuring him to sign a revised contract that drastically reduced his share of the profits and ownership of the show. In the exchange, Johnson revealed that Zappin was once convicted of felony drug possession, a charge that Zappin later admitted.
In October 2013, Zappin bought a controlling interest in NewMediaRockStars, the news site that provided blow-by-blow coverage of his dispute with Johnson.