Paramount and Skydance have reached an agreement on a merger, which could be announced in the coming days. The terms of the deal include Skydance buying out nearly 50% of class B Paramount shares at $15 each, totaling $4.5 billion. Redstone, Paramount’s controlling shareholder, is set to receive $2 billion for National Amusements, which owns 77% of class A Paramount shares. Additionally, Skydance and RedBird would contribute $1.5 billion in cash to Paramount’s balance sheet to help reduce debt. After the merger, Skydance and RedBird would own two-thirds of Paramount, while the class B shareholders would own the remaining third.
The deal is valued at $8 billion, an increase from the initial offer. Earlier terms included a $5 billion offer from Skydance, with Redstone receiving less than $2 billion for her stake, and class B shareholders being bought out at a nearly 30% premium. Paramount’s annual shareholder meeting, scheduled for Tuesday, will not require a vote on the deal. This follows a recent competing offer from Apollo Global Management and Sony Pictures, who expressed interest in acquiring Paramount for about $26 billion. However, Redstone preferred a deal that would keep Paramount together, compared to Apollo and Sony’s plan to break up the company.
Aside from the negotiations with buyers, Paramount has also experienced changes in its C-suite. Bob Bakish stepped down as CEO in late April, and the company is now led by three executives forming the “Office of the CEO.” This includes CBS president and CEO George Cheeks, Chris McCarthy, president and CEO of Showtime/MTV Entertainment Studios and Paramount Media Networks, and Brian Robbins, who heads Paramount Pictures and Nickelodeon. The merger with Skydance marks a significant development for Paramount as the entertainment industry continues to evolve.
The negotiations and eventual agreement between Paramount and Skydance highlight the complexities involved in major mergers and acquisitions within the entertainment sector. Redstone’s preference for a deal that preserves Paramount as a cohesive entity reflects a strategic decision to maintain the company’s brand and operations amidst competitive pressures. The infusion of $1.5 billion in cash from Skydance and RedBird will help Paramount reduce its debt and strengthen its financial position moving forward.
The deal is a significant milestone in Paramount’s corporate history and signals a new chapter in the company’s evolution. The agreement terms, initially reported by The Wall Street Journal, have undergone iterations and adjustments to ultimately arrive at the current $8 billion valuation. The merger could potentially reshape the landscape of the entertainment industry, positioning Paramount for growth and innovation in a rapidly changing market. With the leadership of the “Office of the CEO” in place, Paramount is poised to navigate the challenges and opportunities that lie ahead as it embarks on this new phase of its business operations.
Overall, the merger between Paramount and Skydance represents a strategic move to solidify Paramount’s position in the entertainment industry while addressing financial considerations and shareholder interests. The collaboration between the two companies, along with the participation of RedBird Capital and KKR, underscores the significance and complexity of deal-making in the entertainment sector. As the agreement moves towards finalization pending signoff from Redstone and regulatory approvals, Paramount and Skydance are poised to leverage their combined resources and expertise to drive future growth and success in an evolving and competitive marketplace.
