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Skydance Media Secures Preliminary Merger Deal with Paramount

 |  July 3, 2024

Paramount Global shares saw their largest jump in two months on Wednesday after the revival of a merger deal with independent film and TV producer Skydance Media. Skydance, led by David Ellison, son of Oracle Corp. co-founder Larry Ellison, has reached a preliminary agreement to acquire Shari Redstone’s National Amusements Inc. and merge with Paramount, the parent company of CBS and MTV, according to a source familiar with the matter.

National Amusements, the family company controlling Paramount, will refer the deal to a special committee of Paramount directors for review. This person requested anonymity as the agreement has not yet been publicly announced.

At the opening of trading in New York on Wednesday, Paramount shares surged by as much as 13% to $12.13, and were up 8.9% by 10:39 a.m. This surge reflects investor optimism following the announcement of the merger talks.

The agreement follows the collapse of previous discussions between Skydance and National Amusements last month. However, the two parties resumed negotiations last week, with significant progress being made on Tuesday. The new terms of the deal reportedly include a higher valuation for National Amusements and stronger legal protections for the Redstone family’s company against potential litigation arising from the merger. The sellers have 45 days to seek better offers, another source familiar with the matter added.

Read more: Warner Bros Discovery and Paramount Global Face Mounting Concerns Over Proposed Merger

Neither Paramount nor Skydance commented on the deal, and National Amusements did not respond to inquiries. The Wall Street Journal had reported the agreement earlier on Tuesday, noting that the specifics of the deal were not yet known.

An official announcement could come within days, although there remains a possibility that the deal could fall through.

“The Paramount/Skydance deal has been discussed ad nauseam for 7 months now, and the fact that this is still the only serious deal on the table even today says a lot about Paramount’s strategic choices,” wrote Kannan Venkateshwar, an analyst at Barclays Capital, in a note to investors.

As part of Ellison’s previous proposal, he and his partners, including RedBird Capital Partners and KKR & Co., offered to purchase National Amusements for $2.25 billion and inject $1.5 billion into Paramount’s balance sheet to help reduce its debt. Paramount’s long-term borrowings currently exceed $14 billion.

Source: Finance Yahoo