The recent agreement between Paramount and Skydance has sparked new excitement in the entertainment industry. According to CNBC’s David Faber, the two companies have come to terms on a merger that could potentially be announced in the upcoming days. This merging deal involves a special committee at Paramount and a buying consortium led by David Ellison’s Skydance, with financial backing from private equity firms RedBird Capital and KKR.
One of the key elements of this agreement is the transfer of ownership from National Amusements, which is controlled by Shari Redstone, Paramount’s controlling shareholder. As part of the deal, Redstone is set to receive a substantial sum of $2 billion for National Amusements. Additionally, Skydance is planning to acquire nearly 50% of class B Paramount shares at a price of $15 apiece, totaling $4.5 billion. This move will leave the remaining holders with equity in the new merged company. Moreover, Skydance and RedBird are also in talks to inject $1.5 billion in cash into Paramount’s balance sheet to help alleviate its existing debt.
Upon the completion of the deal, Skydance and RedBird are set to have a controlling stake of two-thirds in Paramount, with the class B shareholders retaining the remaining one-third ownership of the company. The negotiation terms were initially reported by The Wall Street Journal and have since been confirmed by other sources. Notably, the deal will not require a shareholder vote, which was a crucial point in the negotiation process.
In addition to the merger agreement, there have been significant leadership changes at Paramount in recent months. Following Bob Bakish’s departure as CEO in late April, the company is now led by a temporary “Office of the CEO” consisting of George Cheeks, Chris McCarthy, and Brian Robbins. These executives are expected to present the company’s strategic priorities at the annual shareholder meeting.
The Paramount-Skydance merger comes after a competing offer from Apollo Global Management and Sony Pictures, which valued the company at $26 billion. However, Shari Redstone’s preference for keeping Paramount intact led to the decision to merge with Skydance. The future trajectory of Paramount under this new ownership structure remains to be seen, but the entertainment industry is abuzz with anticipation.
Overall, the agreement between Paramount and Skydance signifies a new chapter for both companies, with significant implications for the entertainment landscape. The deal’s financial terms, ownership structure, and leadership changes all point towards a transformative period ahead. As the merger progresses and finalizes, the industry will closely watch how Paramount’s strategic direction evolves under its new ownership.