Paramount, Skydance Agree on New M&A Deal Terms but Shari Redstone Hasn’t Approved Pact Yet

Paramount Global‘s months-long M&A drama may soon be coming to a conclusion.

The special committee established by Paramount Global’s board of directors to evaluate M&A proposals has reached an agreement with David Ellison’s Skydance Media and his private-equity backers on the terms of a complicated deal that would merge Skydance and Paramount while keeping Paramount publicly traded, Variety has confirmed. Skydance and its partners, RedBird Capital and KKR, sweetened the original buyout offer to make it more attractive to nonvoting shareholders of Paramount Global.

Now, the deal awaits approval by Shari Redstone, non-executive chair of Paramount Global, whose National Amusements Inc. owns 77% of the voting shares in Paramount Global. Redstone has not officially decided whether or not to go forward on the deal, sources said — and the terms of the Skydance-NAI part of the agreement have yet to be worked out. If she does agree, it would end her family’s decades-long control over the media conglomerate and its predecessor companies.

The Skydance-Paramount merger would not require approval by Paramount’s Class B shareholders.

On word of the Skydance-Paramount deal potentially nearing the finish line, the price of Class B shares of Paramount Global were trading up 7.5% Monday to about $12.80/share. New details of Skydance’s deal terms were reported earlier by the Wall Street Journal and CNBC.

Reps for Skydance, Paramount Global and the Paramount board’s special committee declined to comment.

A rep for NAI said in a statement to Variety, “We received the financial terms of the proposed Paramount/Skydance transaction over the weekend and we are reviewing them.”

Under the new offer from Skydance-RedBird-KKR, Paramount Class B shareholders will be able to sell a bit less than half of their stock for $15 per share and the remainder of their shares would be converted into shares in the newly merged Paramount-Skydance, according to sources.

The pact proposes that Skydance will acquire the shares of NAI for roughly $2 billion in cash, thereby assuming control of Paramount Global. Skydance would merge with Paramount, valuing Skydance at less than the previous $5 billion figure under the prior offer, at which point Skydance-RedBird-KKR would own about two-thirds of the combined Paramount-Skydance (and legacy Class B Paramount Global shareholders would own the remainder). Skydance and its financial partners would also pay Paramount $1.5 billion in cash, intended to go toward reducing Paramount’s $14.6 billion in long-term debt (as of the end of March).

Paramount Global is holding its 2024 annual shareholders meeting on Tuesday (June 2) starting at 9 a.m. ET, but it is unlikely that a deal with Skydance will officially be a go by then.

After Redstone and Skydance did not clinch a deal on Skydance’s previous offer, Sony Pictures and private-equity giant Apollo Global Management emerged as prospective bidders for Paramount Global but have since backed off their $26 billion all-cash offer to buy the entire company. The Sony-Apollo bid would face a number of regulatory hurdles, including requiring a separate ownership structure for CBS’s owned TV stations.