Key Points:
- Paramount and Skydance have agreed to a $8 billion merger. The deal awaits approval from Shari Redstone, Paramount’s controlling shareholder.
- Skydance will buy nearly 50% of class B shares for $4.5 billion and contribute $1.5 billion to reduce Paramount’s debt.
- Skydance and RedBird will own two-thirds of the new company, with class B shareholders holding the remaining third.
- The deal follows a competing $26 billion offer from Apollo and Sony, which intended to break up Paramount.
Paramount and Skydance Media have agreed to the terms of a significant merger deal, which is expected to be announced in the coming days. The agreement was reached between a special committee from Paramount and a buying consortium led by David Ellison’s Skydance, backed by private equity firms RedBird Capital and KKR. The deal is now pending approval from Paramount’s controlling shareholder, Shari Redstone, who owns National Amusements, which holds 77% of Paramount’s class A shares.
This agreement follows weeks of negotiations and a competing offer from Apollo Global Management and Sony Pictures. The current deal includes Redstone receiving $2 billion for National Amusements. Skydance will purchase nearly 50% of class B Paramount shares at $15 each, totaling $4.5 billion. This arrangement will leave class B shareholders with equity in the newly formed company.
Skydance and RedBird will inject $1.5 billion in cash into Paramount’s balance sheet to help reduce its debt. Upon closing the deal, Skydance and RedBird will own two-thirds of Paramount, while class B shareholders will hold the remaining one-third.
The deal is valued at $8 billion, an increase from the initial $5 billion offer. Under the earlier terms, Redstone would have received less than $2 billion for her stake and class B shareholders would have been bought out at $11 per share, representing a nearly 30% premium. The new terms provide a more favorable outcome for all parties involved.
One notable aspect of the agreement is that it will not require a shareholder vote, as negotiated by the parties involved. Paramount’s annual shareholder meeting is scheduled for Tuesday, but the deal’s completion will not hinge on its outcome.
Apollo and Sony expressed interest in acquiring Paramount for approximately $26 billion in early May. However, Shari Redstone preferred a deal to keep Paramount intact, whereas Apollo and Sony intended to break up the company. This preference influenced the direction of the negotiations, ultimately leading to the current agreement with Skydance.
Paramount has also experienced significant leadership changes in recent months. CEO Bob Bakish stepped down in late April, and the company is now led by a trio of executives referred to as the “Office of the CEO.” This team includes CBS president and CEO George Cheeks; Chris McCarthy, president and CEO of Showtime/MTV Entertainment Studios and Paramount Media Networks; and Brian Robbins, head of Paramount Pictures and Nickelodeon.
