Paramount and Skydance have reached an agreement on the terms of a merger, as reported by CNBC’s David Faber. The deal, which could be announced in the coming days, involves a consortium led by David Ellison’s Skydance, with backing from private equity firms RedBird Capital and KKR. The terms have been agreed upon by a special committee at Paramount, but final approval is pending from Shari Redstone, the controlling shareholder through National Amusements.
Under the current agreement, Redstone is set to receive $2 billion for National Amusements, while Skydance is looking to purchase nearly 50% of class B Paramount shares at $15 each, totaling $4.5 billion. Additionally, Skydance and RedBird will inject $1.5 billion in cash to help improve Paramount’s balance sheet. After the deal is finalized, Skydance and RedBird will jointly own two-thirds of Paramount, with class B shareholders retaining the remaining third.
The terms of the agreement were initially reported by The Wall Street Journal and do not require a shareholder vote. Paramount’s annual meeting is scheduled for Tuesday, where the deal is expected to be a focal point of discussion. The deal is valued at $8 billion, representing a significant increase from the initial offer of $5 billion. Without a deal announcement prior to the meeting, shareholders are eagerly anticipating the outcome of the discussions.
In addition to the merger negotiations, Paramount has recently undergone changes in its C-suite. Former CEO Bob Bakish stepped down in April, leading to the establishment of an “Office of the CEO” comprised of three executives: George Cheeks, Chris McCarthy, and Brian Robbins. These leaders plan to outline their strategic priorities at the annual meeting before presenting at a scheduled board meeting later that day. Redstone has expressed approval of the leadership trio during their brief tenure.
Prior to the agreement with Skydance, Apollo and Sony had expressed interest in acquiring Paramount for approximately $26 billion. However, Redstone was in favor of a deal that would keep the company intact, as opposed to a potential breakup proposed by Apollo and Sony. The focus now shifts to finalizing the merger with Skydance and RedBird, with significant implications for the future strategic direction of Paramount.
Overall, the Paramount and Skydance merger deal represents a critical juncture for the iconic entertainment company. With financial details in place and leadership transitions underway, stakeholders are closely monitoring the developments as the deal progresses towards completion. The outcome of the merger will undoubtedly shape the future trajectory of Paramount in the ever-evolving landscape of the entertainment industry.