(Source-Martina Albertazzi_Bloomberg)
Paramount’s controlling shareholder, Shari Redstone, is reportedly on the verge of selling her stake to Skydance, according to sources familiar with the matter. Additionally, Paramount and Skydance have outlined a tentative framework for a merger deal, utilizing an exclusive 30-day negotiation window to finalize the details.
While Paramount and Skydance have refrained from commenting on the matter, Shari Redstone has yet to respond to requests for comment.
Over the years, Paramount has witnessed a decline in its shares, indicative of its struggle to retain TV viewers amidst evolving entertainment trends and its costly endeavors to establish a streaming service. As of Wednesday’s trading close, the company held a market value of $9.17 billion.
Navigating the Complexities: Paramount and Skydance Merger Talks
In light of these challenges, Shari Redstone has contemplated selling the company to Ellison, son of Larry Ellison, the billionaire co-founder of Oracle Corp. With the Redstone family’s National Amusements holding an almost 80% voting stake in Paramount, their approval stands as a critical component for any prospective deal.
While Skydance has collaborated with Paramount on projects such as Top Gun: Maverick, a full-scale merger poses a more intricate scenario, with no guarantee of reaching a consensus.
Apart from acquiring Redstone’s stake, negotiations will entail formulating terms that satisfy Paramount’s remaining shareholders. Paramount executives emphasized their commitment to “creating value for all shareholders” during a recent investor conference in March.
The specific terms of the potential deal remain undisclosed, and any agreement is contingent upon approval from Paramount’s board. Earlier reports from The Wall Street Journal indicated Paramount and Skydance’s intent to engage in exclusive discussions.
Market Response and Potential Impact: Analyzing Paramount’s Stake Sale to Skydance
Paramount has garnered interest from other potential buyers, including independent media mogul Byron Allen, Apollo Global Management Inc., and Warner Bros. Discovery Inc.
By opting for exclusive talks with Skydance, Paramount’s board appears to favor Skydance over Apollo’s recent $26 billion all-cash offer, as per earlier reports from The Wall Street Journal. Paramount’s long-term debt stands at approximately $14.6 billion.
Following reports of the potential deal, Paramount’s nonvoting shares experienced a notable 15% surge, closing at $13.52 in New York, marking their most substantial single-day gain since November.
On Wednesday, the stock price surged by 15 percent, with the entirety of the increase occurring in the minutes preceding the market’s closure. This surge followed a report by The Wall Street Journal stating that Paramount, along with its controlling shareholder National Amusements, led by Shari Redstone, has entered into an exclusive negotiating period with David Ellison’s Skydance. This development marks a significant milestone in a potential sale of the media and entertainment conglomerate overseen by Redstone, unfolding in a two-stage process. Paramount and Skydance opted not to provide any comment regarding the report.
