🤯 Picked by our AI, this stock rallied more than Nvidia this month, yielding 94% since MarchSee the stock

Paramount to enter into exclusive merger talks with Skydance, source says

Published 04/03/2024, 03:42 PM
Updated 04/04/2024, 09:31 AM
© Reuters. FILE PHOTO: Toy figures of people are seen in front of the displayed Paramount + logo, in this illustration taken January 20, 2022. REUTERS/Dado Ruvic/Illustration/File Photo

By Dawn Chmielewski

(Reuters) -Members of Paramount Global's board agreed on Wednesday to enter into exclusive merger talks with Skydance Media, favoring the independent studio over a $26 billion offer from Apollo Global Management (NYSE:APO), a person familiar with the matter said.

The deal talks, which are more advanced than the offer from the U.S. private equity firm, are part of a two-step process that, if successful, would end Shari Redstone's control of the media empire built by her father, the late Sumner Redstone.

A special committee of Paramount's board elected "to pursue the bird in hand," rather than chase a deal "that might not actually come to fruition," said the person with knowledge of the board's action, adding that the period of exclusivity for discussions will run for 30 days.

Paramount's shares surged nearly 15% on Wednesday after The Wall Street Journal first reported the exclusive negotiations with Skydance.

Skydance, led by David Ellison - son of Oracle (NYSE:ORCL) co-founder Larry Ellison - is seeking to buy National Amusements, the Redstone family's holding company, which directly or indirectly owns about 77% of Paramount's voting class stock.

That sale is contingent upon Ellison's ability to merge Skydance and Paramount Global.

A special committee of Paramount's independent directors has spent months in negotiations with Skydance, said the source, who added that the group's advisors, Centerview Partners and the law firm Cravath, Swaine & Moore, recommended the parties enter exclusive talks in an attempt to reach a deal.

Skydance declined to comment. Paramount and National Amusements could not be reached for comment.

Apollo submitted its $26 billion all-cash offer for Paramount Global over the weekend, according to three sources familiar with the terms of the bid.

All sources were not authorized to speak to media and declined to be identified.

This represents a substantial increase from a bid earlier this year of $11 billion for the crown jewel among Paramount Global's media assets, its film studio. Paramount's enterprise value at the end of 2023 was about $22.5 billion.

Two people familiar with Apollo's offer described it as "extremely preliminary," noting that it was not the result of negotiations or diligence, but rather to "stall" any deal with Skydance.

A successful Skydance-Paramount deal would mark further consolidation in the media industry where traditional television businesses have declined as audiences gravitate to video streaming services. The industry is also grappling with the impact of Hollywood's labor strikes last year and a soft advertising market.

© Reuters. FILE PHOTO: Toy figures of people are seen in front of the displayed Paramount + logo, in this illustration taken January 20, 2022. REUTERS/Dado Ruvic/Illustration/File Photo

Paramount Global has lost more than $16 billion in value since it was formed through the hard-fought reunion of CBS and Viacom in 2019. The company’s market capitalization fell below $10 billion in January. 

In January, a source said Ellison was exploring an all-cash bid to acquire National Amusements. 

Latest comments

Loading next article…
Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.