UPDATED: Shares of Paramount Global sprang to life ahead of the July 4 holiday on a renewed agreement between Skydance Media and controlling shareholder Shari Redstone that would merge Skydance and Paramount.
Skydance Media and National Amusements Inc. Reach New Merger Agreement for Paramount Global
On Wednesday (July 3), Paramount’s stock opened up 13% to over $12/share, its highest levels in nearly a month. However, the price drifted down throughout the morning to close at $11.46/share (up 6.9%) for the shortened session that ended at 1 p.m. ET. Last month shares had tumbled after Redstone nixed Skydance’s previous offer on June 11, falling to all-time lows of under $10.
The bump comes on the news Tuesday that Redstone reached a preliminary deal with David Ellison’s Skydance production company — three weeks after the previous talks fell apart. The basic structure of the pact is the same: Skydance would buy out National Amusements Inc. and then combine Paramount and Skydance, with nonvoting Paramount Class B shareholders entitled to cash out nearly half their shares at $15/share. The deal is now being reviewed by the Paramount Global board’s special committee established to evaluate M&A offers. (Reps for the special committee did not respond to requests for comment.)
Crucially, what’s different in the new agreement: It includes a “go-shop” provision, under which Paramount and NAI are understood to have a 45-day window to solicit an offer to match or beat Skydance’s terms. That appears designed to be in lieu of giving Paramount’s nonvoting shareholders approval over the deal and is likely intended to fend off shareholder litigation, by giving NAI and the Paramount Global board cover to “reasonably say they considered all options for maximizing the value paid out to common shareholders,” Variety reported .
The latest offer would reduce Redstone’s payout for NAI to about $1.75 billion, per reports by the Wall Street Journal and CNBC ; that’s down from roughly $2.1 billion under the most recent Skydance offer. In addition, Skydance and its financial backers, RedBird Capital Partners and KKR, would contribute $1.5 billion in cash (the same as under their previous offer) to help Paramount pay down its nearly $15 billion in debt.
Paramount Reportedly in Talks to Sell BET for $1.6 Billion in Buyout Led by CEO Scott Mills
The lift in Paramount’s stock price came after shares had risen 5.7% Tuesday following a report that the company was in talks to sell BET for $1.6 billion-$1.7 billion to a group led by BET CEO Scott Mills. Meanwhile, Variety confirmed a CNBC report that Warner Bros. Discovery is in talks with Paramount Global for partnership between WBD’s Max and Paramount+ — a strategy that would likely continue to be pursued if the Skydance deal goes through.
If the Skydance-NAI-Paramount deal is consummated this time around, the expectation is that the Skydance team would install new senior management at the media conglomerate. After Paramount Global removed Bob Bakish as CEO in April, the board appointed a three-person Office of the CEO led by Chris McCarthy, CEO of Showtime/Paramount Networks and MTV Studios; George Cheeks, CEO of CBS; and Brian Robbins, CEO of Paramount Pictures and Nickelodeon. They’ve outlined a strategy to slash costs through layoffs and other measures to save upwards of $500 million annually, as well as sell off assets to pay off debt and ink a joint venture for the Paramount+ streaming biz.
Pictured above: Shari Redstone, David Ellison
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