According to the report of CNBC’s David Faber, Paramount and Skydance have agreed to the terms of a merger and the announcement regarding the deal could be announced in the coming days.
As per the reports, a special committee at Paramount and a consortium led by David Ellison’s Skydance, supported by private equity firms RedBird Capital and KKR, have agreed on the terms of a deal. The agreement is pending approval from Paramount’s controlling shareholder, Shari Redstone. Notably, National Amusements owned by Redstone holds 77% of Paramount’s class A shares.
The agreement terms followed weeks of discussions and a recent competing offer from Apollo Global Management and Sony Pictures.
National Amusements spokesperson, said, “We received the financial terms of the proposed Paramount/Skydance transaction over the weekend and we are reviewing them.”
Under the current terms of the deal, Redstone is set to receive $2 billion for National Amusements according to Faber’s report on Monday. Furthermore, while existing shareholders will retain equity in the new company, Skydance is slated to acquire almost 50% of class B Paramount shares at $15 each totalling $4.5 billion. Additionally, to aid in debt reduction Skydance and RedBird are expected to inject $1.5 billion in cash into Paramount’s balance sheet.
Notably, Skydance and RedBird would hold a controlling interest of two-thirds in Paramount, while the remaining one-third would be owned by class B shareholders after the completion of the deal, as per Faber’s report. The terms of the agreement were previously disclosed by The Wall Street Journal.
The annual shareholder meeting for Paramount is scheduled for Tuesday, however, it has been stated that the deal will not necessitate a vote from the shareholders, a detail that was included in the negotiations according to Faber’s report.
Additionally, from the previous offer of $5 billion, the current valuation of the deal stands at $8 billion, reflecting a notable increase. Notably, Redstone’s stake would have garnered less than $2 billion, under the initial terms, while class B shareholders would have seen a buyout at a nearly 30% premium, priced at $11 per share.
No announcement regarding the deal is anticipated before the upcoming meeting according to sources familiar with the matter. Paramount has experienced changes in its executive leadership in recent months alongside the intricacies of the negotiations with potential buyers. Bob Bakish resigned from his position as CEO in late April, leading to the establishment of what the company terms the “Office of the CEO.”