After a dance that makes the Argentinian Tango look sedate, Paramount Global and Skydance have reportedly finally agreed to terms of a merger.
CNBC’s David Faber reported the deal was essentially finalized Monday morning, with a formal announcement expected in the coming days. Shari Redstone, owner of National Amusements and the controlling shareholder of Paramount, is said to be reviewing the proposal now. That could be simply a formality, however. Redstone has been a backer of Skydance’s proposal for some time.
The deal would see Skydance buy National Amusements, then Paramount would acquire Skydance, putting Skydance CEO David Ellison in charge.
Faber reports the deal would see Redstone walk away with $2 billion. Holders of the company’s Class B stock would have the choice to receive $15 per share or an equity stake of the new company.
Shareholders who do not sell their current holdings will ultimately own one-third of the new company’s outstanding shares. The remainder would be held by Skydance and RedBird Capital, a private equity firm that is backing Ellison’s bid for Paramount. Skydance and RedBird will also invest $1.5 billion in the new company to reduce debt.
The overall value of the deal is $8 billion, a considerable increase from the earlier offer of $5 billion. The Paramount-Skydance merger will reportedly not require a vote from shareholders, Faber reported. That was said to be part of the negotiations between the two parties. (Skydance, in buying National Amusements, would instantly receive a controlling interest in Paramount.)
The search for a buyer at Paramount has been a winding one. Warner Bros. Discovery was widely expected to purchase the company at the start of the year but paused negotiations in late February, effectively dropping out of the race.
Skydance, in April, became the leading candidate, to the point where the entertainment company paused talks with all suitors for 30 days to focus on those negotiations. Things didn’t go as smoothly as anticipated, however.
In late April, Paramount CEO Bob Bakish left the company in opposition of the deal. And in May, Skydance made what it called its “best and final” offer. The Paramount board opted to let the exclusive negotiating period end, which indicated it wasn’t interested.
That opened things up for a nonbinding $26 billion offer from Sony and Apollo Global Management. Redstone was said not to be in favor of the terms of that deal, however, which hurt its chances. The Sony deal also faced a hurdle, in that foreign owners, such as the Japanese consumer electronics brand, are not allowed to hold licenses for U.S. broadcast stations, such as the CBS-owned ones in the Paramount portfolio. Even if the board had approved that offer, the deal would have needed the green light from the Committee on Foreign Investment.
Paramount’s annual shareholder meeting is scheduled for Tuesday, which could be when the announcement of the Paramount-Skydance merger is made, assuming things don’t fall apart again, which is always a possibility.
Skydance is said to be primarily interested in the Paramount Pictures studio and may look to divest other interests. That leaves the fate of holdings including CBS, MTV, and the Paramount+ streaming service uncertain.
Skydance has been an increasingly strong presence in Hollywood in the past several years, producing blockbuster films including Top Gun: Maverick, Mission: Impossible—Dead Reckoning, and Transformers: Rise of the Beast.
Shares of Paramount Global were up 8% in midday trading Monday at about $13 per share on news of the reported deal. That’s still well off of the 52-week high of $17.50 and out of distance of the stock’s all-time high of $97.35, which was hit on March 19, 2021.