The special committee established by Paramount's board of directors has reached an agreement with David Ellison's Skydance Media and its private-equity backers, RedBird Capital and KKR, on the terms of a complex merger deal. The proposed transaction would combine Skydance and Paramount while maintaining Paramount's status as a publicly traded company, according to sources familiar with the matter.
The fate of the deal now rests in the hands of Shari Redstone, non-executive chair of Paramount Global, whose National Amusements Inc. (NAI) controls 77% of the voting shares in Paramount. Redstone has yet to officially decide whether to proceed with the merger, and the terms of the Skydance-NAI portion of the agreement remain unresolved. If Redstone agrees to the deal, it would mark the end of her family's long-standing control over the media conglomerate and its predecessor companies.
Under the revised offer from Skydance-RedBird-KKR, Paramount Class B shareholders will have the opportunity to sell slightly less than half of their stock for $15 per share, with the remaining shares being converted into shares of the newly merged Paramount-Skydance entity. The proposed deal also involves Skydance acquiring NAI's shares for approximately $2 billion in cash, effectively assuming control of Paramount Global. Skydance would then merge with Paramount, with the combined entity being valued at less than the previously reported $5 billion figure. Following the merger, Skydance-RedBird-KKR would own roughly two-thirds of the combined Paramount-Skydance, while legacy Class B Paramount Global shareholders would own the remaining third.
In addition to the share buyout and conversion, Skydance and its financial partners have agreed to contribute $1.5 billion in cash to Paramount's balance sheet, intended to help reduce the company's substantial long-term debt, which stood at $14.6 billion as of the end of March.
The sweetened offer from Skydance and its backers comes after weeks of discussions and a competing bid from Apollo Global Management and Sony Pictures, which had proposed an all-cash offer of $26 billion to acquire Paramount in its entirety. However, the Apollo-Sony bid faced significant regulatory hurdles, including the need for a separate ownership structure for CBS's owned TV stations, and has since been abandoned.
Paramount Global is set to hold its 2024 annual shareholders meeting on Tuesday, June 2, but it is unlikely that a finalized deal with Skydance will be announced by then. A spokesperson for NAI confirmed that they had received the financial terms of the proposed Paramount-Skydance transaction over the weekend and are currently reviewing them.
The potential merger has already had an impact on Paramount Global's Class B shares, which were trading up 7.5% Monday to around $12.80 per share following reports of the deal nearing completion. If the merger is approved, it will not require a vote from Paramount's shareholders, as this was part of the negotiated terms.
Paramount has undergone significant changes in its leadership in recent months, with Bob Bakish stepping down as CEO in late April and being replaced by the "Office of the CEO," consisting of three executives: George Cheeks, Chris McCarthy, and Brian Robbins. The temporary leaders are expected to present their strategic priorities at Tuesday's annual meeting and a subsequent board meeting, where Shari Redstone has reportedly expressed approval of their ideas and leadership during their short tenure.
