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Paramount-Skydance Deal Reaches Agreement on Merger Terms

 |  June 3, 2024

Paramount and Skydance have reached an agreement on merger terms, as reported by CNBC. This merger, which has been the subject of much speculation and negotiation, could be officially announced in the days to come.

The merger agreement was reached between a Paramount special committee and a buying consortium led by David Ellison’s Skydance, with financial backing from private equity firms RedBird Capital and KKR. The deal now awaits the approval of Paramount’s controlling shareholder, Shari Redstone, of National Amusements, which holds 77% of class A Paramount shares.

According to Faber, the deal’s terms were finalized following a bid from Apollo Global Management and Sony Pictures, highlighting the high stakes and significant interest in Paramount’s future. A spokesperson for National Amusements confirmed, “We received the financial terms of the proposed Paramount/Skydance transaction over the weekend and we are reviewing them.”

The financial structure of the deal involves Shari Redstone receiving $2 billion for National Amusements. Additionally, Skydance plans to acquire nearly 50% of class B Paramount shares at $15 each, amounting to $4.5 billion. This arrangement would leave the class B shareholders with equity in the newly formed company, while Skydance and RedBird contribute an additional $1.5 billion in cash to bolster Paramount’s balance sheet and aid in debt reduction.

Read more: Apollo, Sony Bid to Acquire Paramount Faces Regulatory Hurdles

Upon the deal’s closure, Skydance and RedBird are poised to own two-thirds of the merged entity, with the remaining third belonging to the class B shareholders. This ownership structure was part of a deal valued at $8 billion, a significant increase from the initial $5 billion offer. Notably, the deal will proceed without a shareholder vote, a stipulation that was integral to the negotiations.

Paramount’s annual shareholder meeting, scheduled for Tuesday, is not expected to feature an announcement regarding the deal. This comes amid a period of considerable change within Paramount’s executive ranks, including the departure of CEO Bob Bakish in late April. The company is currently led by an “Office of the CEO,” comprising George Cheeks, Chris McCarthy and Brian Robbins, overseeing various divisions within Paramount.

Source: CNBC