Recently, CNBC’s David Faber reported that Paramount and Skydance have finalized the terms of a merger that could potentially be announced in the upcoming days. This merger involves a buying consortium led by David Ellison’s Skydance, with the support of private equity firms RedBird Capital and KKR, reaching an agreement with a special committee at Paramount. The deal is currently pending approval from Shari Redstone, Paramount’s controlling shareholder through National Amusements, which holds 77% of class A Paramount shares.
As per the terms of the agreement, Redstone is set to receive $2 billion for National Amusements, while Skydance intends to purchase close to 50% of class B Paramount shares at $15 per share, totaling $4.5 billion. This transaction would leave the existing class B shareholders with a stake in the new entity. Moreover, Skydance and RedBird are prepared to inject $1.5 billion in cash into Paramount’s balance sheet to assist in reducing its debt burden. Following the completion of the deal, Skydance and RedBird would be majority owners of Paramount, holding two-thirds of the company, with the remaining third owned by class B shareholders.
Interestingly, shareholders are not required to vote on the deal, a pivotal aspect of the negotiation process. Paramount’s annual shareholder meeting is scheduled for Tuesday, where the agreement will likely be discussed. While the deal is worth $8 billion, an increase from the previous $5 billion offer, the announcement is not expected until after the meeting concludes. This confidentiality is emphasized by individuals familiar with the matter, who preferred anonymity due to the private nature of the negotiations.
In light of the upcoming merger, Paramount’s C-suite has witnessed significant changes in recent months. Bob Bakish stepped down as CEO in April, leading to the establishment of the “Office of the CEO,” comprising George Cheeks, Chris McCarthy, and Brian Robbins. These executives will present the company’s strategic priorities at the annual meeting, showcasing a unified approach to leadership in the interim. Redstone has expressed satisfaction with the performance of the triumvirate, indicating stability within Paramount’s top management.
Earlier, Apollo Global Management and Sony Pictures expressed interest in acquiring Paramount for approximately $26 billion, portraying alternative scenarios for the company’s future. However, Redstone’s preference for maintaining Paramount’s integrity steered away from potential breakup proposals by Apollo and Sony. This decision underscores the significance of preserving Paramount as a cohesive entity, aligning with the current merger discussions.
The impending merger between Paramount and Skydance signifies a transformative chapter in both companies’ trajectories. The agreement terms, deal structure, shareholder dynamics, and leadership transitions all contribute to a compelling narrative surrounding Paramount’s evolution. As the entertainment industry continues to evolve, mergers and acquisitions serve as strategic tools for companies seeking growth and competitive edge. The Paramount-Skydance merger encapsulates these strategic imperatives, setting the stage for a new era in Hollywood’s landscape.