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In a significant development in the media industry, Paramount Global and Skydance Media have agreed on the terms of a merger deal that could reshape the entertainment landscape. The special committee of Paramount Global’s board of directors and David Ellison’s Skydance Media, backed by private-equity firms RedBird Capital and KKR, have revised the merger terms to offer a more enticing proposition to Paramount’s nonvoting shareholders.
The deal, which is yet to receive the green light from Shari Redstone, non-executive chair of Paramount Global, proposes a complex arrangement that would merge Skydance and Paramount while keeping Paramount publicly traded. Redstone, whose National Amusements Inc. controls a majority of the voting shares, has not yet made a decision. Her approval would mark the end of her family’s longstanding influence over the media conglomerate and its antecedent entities.
Under the new terms, Paramount Class B shareholders are presented with an opportunity to sell a portion of their stock at $15 per share, with the remaining shares transitioning into the newly merged Paramount-Skydance entity. The revised offer values Skydance at a figure below the initial $5 billion, with Skydance-RedBird-KKR poised to own approximately two-thirds of the combined company post-merger.
The merger’s financial intricacies include Skydance acquiring NAI’s shares for about $2 billion in cash, thereby assuming control of Paramount Global. Additionally, Skydance and its partners would contribute $1.5 billion in cash to Paramount, aiding in the reduction of its $15 billion debt.
As Paramount Global prepares for its 2024 annual shareholders meeting, the potential merger has already had a positive Impact on the market, with Paramount Global’s Class B shares experiencing a 7.5% surge in value. However, with the shareholders’ meeting imminent, it remains uncertain whether the deal will be finalized in time.
The merger discussions come after previous interest from Sony Pictures and Apollo Global Management, who had considered a $26 billion all-cash bid for Paramount Global but later retracted their offer. The unfolding scenario suggests a pivotal moment for Paramount Global, as it navigates through this transformative period in its corporate history.
