Paramount and Skydance have reached an agreement for a merger, pending approval from Paramount’s controlling shareholder, Shari Redstone. The deal involves Skydance, backed by private equity firms RedBird Capital and KKR, acquiring nearly half of Paramount’s class B shares at $15 apiece, along with contributing $1.5 billion in cash to reduce Paramount’s debt. Following the merger, Skydance and RedBird would own two-thirds of Paramount, while class B shareholders would own the remaining third without requiring a vote from the shareholders.
The agreement terms have been finalized after weeks of negotiations and a competing offer from Apollo Global Management and Sony Pictures. The deal values Paramount at $8 billion, with Redstone set to receive $2 billion for her stake in National Amusements, which owns 77% of class A Paramount shares. The deal reflects a change from the previous offer, where Redstone would have received less than $2 billion, and class B shareholders would have been bought out at a 30% premium at $11 per share.
Paramount’s C-suite has also experienced changes, with Bob Bakish stepping down as CEO in April and being replaced by an “Office of the CEO” consisting of three executives from CBS, Showtime/MTV Entertainment Studios, Paramount Media Networks, Paramount Pictures, and Nickelodoon. The merger with Skydance and RedBird is seen as a way to keep Paramount from being broken up, as was the plan with the Apollo and Sony offer. The deal does not require approval from shareholders, and the annual shareholder meeting is scheduled for Tuesday.
The merger between Paramount and Skydance represents a strategic move to strengthen Paramount’s financial position and reduce its debt. Skydance’s purchase of nearly half of Paramount’s class B shares, along with the injection of $1.5 billion in cash, will help improve Paramount’s balance sheet and allow the company to operate with greater financial flexibility. The agreement also ensures that Paramount remains intact as a single entity, in contrast to the proposed breakup by Apollo and Sony.
The deal with Skydance and RedBird comes after a period of uncertainty and negotiation, with various offers and proposals being considered. The agreement values Paramount at $8 billion, providing a higher payout for Redstone and class B shareholders compared to previous offers. The merger is expected to have a significant impact on Paramount’s ownership structure, with Skydance and RedBird becoming the majority owners of the company.
The involvement of private equity firms RedBird Capital and KKR in the merger deal underscores the confidence in Paramount’s future prospects and the potential for growth under new ownership. The agreement reflects a shift in Paramount’s leadership structure, with the “Office of the CEO” taking charge in the wake of Bakish’s departure. The merger with Skydance and RedBird is seen as a positive development for Paramount, allowing the company to navigate through challenges and emerge stronger in the competitive entertainment industry.
