Paramount, Skydance Enter Exclusive Merger Talks, Spurning $26 Billion Offer From Apollo
Entertainment conglomerate is putting on pause any conversations with other bidders for 30 days
Members of Paramount Global’s PARA 14.97%increase; green up pointing triangle board agreed to enter exclusive merger discussions with Skydance, favoring it over a recent $26 billion all-cash offer from private-equity firm Apollo Global Management APO 1.84%increase; green up pointing triangle.
The move means the entertainment conglomerate is putting on pause any conversations with other bidders for 30 days while it tries to work out a deal with Skydance, a production company led by David Ellison, people familiar with the matter said.
The decision could give Skydance an edge over Apollo, which earlier had offered $11 billion for Paramount’s movie studio, but on Sunday offered to buy the entire company for $26 billion, including debt.
Paramount’s directors opted to move forward with Skydance as it wasn’t clear how Apollo would finance its bid, said some of the people. People close to the Apollo bid said the private-equity firm wouldn’t need additional debt financing to buy Paramount because its existing capital structure could be rolled into a new deal.
Shari Redstone, Paramount Global’s controlling shareholder, has been in talks with Ellison to sell National Amusements, her family’s media empire that owns about 77% of the voting shares of Paramount, since late last year.
The two have already agreed to terms, but Skydance has made it clear that to close that deal, it needs to make sure that it is allowed to merge their studios. Skydance has partnered with Paramount on such movies as “Top Gun: Maverick” starring Tom Cruise.
Merging the studios requires a second deal between Paramount and Skydance that has to be approved by an independent committee of directors at Paramount. That committee must approve that the deal is good for all shareholders, not just National Amusements. Paramount’s management, including Chief Executive Bob Bakish, isn’t being included in the decision-making, some of the people said.
The New York Times earlier reported that Skydance and Paramount were discussing entering exclusivity.
Ellison, Skydance’s CEO, is the son of billionaire Larry Ellison, the co-founder of Oracle, who is expected to help fund a deal, the Journal previously reported.
Skydance is backed by investors including Ellison’s father; private-equity firms RedBird Capital Partners and KKR, as well as Chinese tech investment giant Tencent. Skydance in 2022 raised $400 million in new capital, valuing it at more than $4 billion. Paramount, whose stock has lost nearly half of its value in the past year, has a market capitalization of about $8 billion.