Shari Redstone, Paramount Global, attends the Allen & Co. conference. Media and Technology in Sun Valley, Idaho on July 11, 2023.
David A. Grogan | CNBC
Sony Pictures and private equity firm Apollo Global Management sent a letter to The most significant global one According to people familiar with the matter, management has expressed interest in acquiring the company for about $26 billion.
The expression of formal interest comes as David Ellison’s Skydance Media, backed by private equity firms RedBird Capital and KKR, awaits word from Paramount’s special committee on whether the panel will recommend its takeover bid. to controlling shareholder Shari Redstone.
Skydance Media has not yet heard from the select committee, although it expects to hear the select committee’s recommendations on next steps as early as Thursday, according to people familiar with the matter. The Paramount panel may recommend approval or rejection of Skydance’s offer, or may approach the Skydance consortium with alternatives or changes.
Spokesmen for Paramount, Redstone’s National Amusements, the select committee and Skydance declined to comment. Sony and Apollo did not immediately respond to requests for comment.
Paramount Options
If the special committee wants to continue negotiations with Skydance or Redstone wants more time to consider options while still talking to Ellison’s company, the parties could extend the exclusivity window until Friday. It’s also possible that Skydance will walk away from the deal it has been negotiating for months.
If Skydance leaves, Redstone can focus its attention on negotiating a deal with Sony and Apollo that would provide all common shareholders with a premium payment for their shares.
Paramount Global shares jumped more than 12% on news that Sony and Apollo had filed a letter formalizing their interest, as previously reported by the website Novel York Times AND “Wall Street” daily.
Redstone initially rejected Apollo’s offer in favor of exclusive talks with Skydance. Redstone still prefers a deal that keeps Paramount together, as the Skydance offer would, said a person familiar with the matter. A private equity firm would likely tear the company apart through a series of divestitures to extract value.
The Sony-Apollo offer would make Sony a majority shareholder and Apollo a minority shareholder, according to a person familiar with the letter. It could also allay Redstone’s fears that a modern buyer could break up the company, because Sony is another large Hollywood player and the owner of Sony Pictures.
The $26 billion offer for Paramount Global values the company higher than its current enterprise value of $22 billion.
Still, the special committee would likely want to review financing details and be assured that the merger with Sony, a non-US entity, would not pose any regulatory challenges. To do so, the special committee would have to inform the Skydance consortium of its desire to end exclusive talks, which would likely deter Skydance as a bidder, according to people familiar with the matter.
The move would be applauded by many Class B shareholders, including Gamco, Matrix Asset Advisors and Aspen Sky Trust, who have publicly expressed dismay over the Skydance deal. Skydance’s “best and final” offer included merging its entertainment assets with Paramount, raising $3 billion to buy out common shareholders at a roughly 30% premium on an unchanged price of $11 per share, and paying Redstone nearly $2 billion for its controlling interest.
Redstone could also argue that she feels more comfortable growing Paramount Global without a sale. Earlier this week, the board dismissed Bob Bakish as the company’s CEO. Appointing a modern CEO and presenting a modern plan for the future to investors would be necessary to reassure restless common shareholders who would likely argue that an Apollo-Sony bid, if viable, is in shareholders’ best interests.
