Paramount Skydance Merger Agreed For Mega Billions

By Charlene Badasie | Updated

Paramount and Skydance have reportedly reached a merger agreement, with the terms expected to be publicly announced soon. The deal was negotiated between a special committee representing Paramount and the buying consortium, which includes Skydance, backed by private equity firms RedBird Capital and KKR.

The agreement is pending approval from Shari Redstone, Paramount’s controlling shareholder. Redstone also owns National Amusements, which holds 77 percent of Paramount’s Class A shares. The deal with Skydance follows weeks of discussions and a recent competing offer from Apollo Global Management and Sony Pictures.

The Best Possible Result For Paramount

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Paramount’s Shari Redstone is set to get $2 billion for National Amusements. Skydance plans to purchase almost half of the class B Paramount shares for $15 each, totaling $4.5 billion, leaving the current shareholders with stakes in the new company. Additionally, Skydance and RedBird will inject $1.5 billion in cash into Paramount’s balance sheet to assist in lowering its debt.

“We received the financial terms of the proposed Paramount/Skydance transaction over the weekend, and we are reviewing them,” a National Amusements spokesperson said in a statement via CNBC. After the agreement is finalized, Skydance and RedBird will possess two-thirds of Paramount, with the remaining third belonging to Class B shareholders.

A Huge Upgrade From Previous Deals

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According to previous reports, the agreement won’t need approval from shareholders, which was negotiated during the talks. The deal’s value is $8 billion, a significant increase from the previous $5 billion proposal. Under the earlier terms, Redstone would have received less than $2 billion for her stake, and Class B shareholders would have been offered a 30 percent premium at $11 per share.

Rotating Executives

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Insiders, who wished to remain anonymous due to the private nature of the discussions, mentioned that no formal announcement about the Paramount/Skydance deal is expected before the annual shareholder meeting, which will take place in the coming days. Alongside the twists and turns of negotiations with potential buyers, Paramount’s executive team has seen changes in recent months.

In late April, Bob Bakish stepped down as CEO. He was replaced by what the company refers to as the “Office of the CEO.” The group consists of three executives: CBS president and CEO George Cheeks, Showtime/MTV Entertainment Studios and Paramount Media Networks president and CEO Chris McCarthy, and Paramount Pictures and Nickelodeon head Brian Robbins.

Changing Priorities For The New Company

These executives are set to outline strategic priorities at the annual shareholder meeting. The temporary leaders will then attend a different pre-arranged board meeting to discuss the Paramount/Skydance deal. One insider noted that Shari Redstone had endorsed the ideas and leadership of this triumvirate during their brief tenure.

Paramount Could Sell Off Properties

Apollo and Sony officially expressed interest in acquiring Paramount for approximately $26 billion in early May. However, Shari Redstone preferred a deal that maintained Paramount’s unity, while Apollo and Sony had plans to split up the company, unlike Skydance. Paramount had previously considered a deal with Warner Bros. Discovery but halted negotiations.

The Paramount/Skydance deal has faced some opposition from minority investors, who argue it prioritizes Shari Redstone over other shareholders. The merger could also lead to significant changes in Paramount’s operations, including the potential divestment of certain assets.