The most significant and Skydance have agreed to merger terms, CNBC’s David Faber reported on Monday. He added that the transaction could be announced in the coming days.
Paramount’s special committee and the buying consortium, David Ellison’s Skydance, backed by private equity firms RedBird Capital and KKR, agreed to terms. The deal is pending signature from Paramount’s majority shareholder, Shari Redstone, owner of National Amusements, which owns 77% of Paramount’s Class A stock, Faber said Monday.
The terms of the deal were announced after weeks of discussions and a recent competing offer from Apollo Global Management and Sony Pictures.
“We received the financial terms of the proposed Paramount/Skydance transaction over the weekend and are reviewing them,” a National Amusements spokesman said.
Faber said Monday that the current deal calls for Redstone to receive $2 billion from National Amusements. Skydance would buy nearly 50% of Paramount’s Class B shares for $15 apiece, or $4.5 billion, leaving holders with equity in the fresh company.
Skydance and RedBird will also contribute $1.5 billion in cash to Paramount’s balance sheet to facilitate reduce debt.
Once the transaction closes, Skydance and RedBird will own two-thirds of Paramount, and Class B shareholders will own the remaining one-third of the company, Faber said. The terms were negotiated reported previously by The Wall Street Journal.
The deal will not require a shareholder vote, which was part of the negotiations, Faber said. Paramount’s annual shareholder meeting will be held on Tuesday.
The deal is valued at $8 billion, up from the previous offer of $5 billion. Under the previous terms, Redstone would have received just under $2 billion for its shares, and Class B shareholders would have been bought out at a nearly 30% premium at $11 per share, CNBC previously reported.
No deal is expected to be announced before the meeting, according to people familiar with the matter who asked not to be identified because the talks are private. In addition to the twists and turns in negotiations with buyers, Paramount’s executive suite has also undergone a makeover in recent months.
Bob Bakish stepped down as CEO in delayed April and was replaced by what the company calls the “Office of the CEO.” Paramount is currently led by three executives: George Cheeks, chairman and CEO of CBS; Chris McCarthy, president and CEO of Showtime/MTV Entertainment Studios and Paramount Media Networks; and Brian Robbins, head of Paramount Pictures and Nickelodeon.
They plan to present strategic priorities at Tuesday’s annual meeting. A previously scheduled board meeting will be held later Tuesday, where interim leaders will again be present, the people said. Redstone approved of the triumvirate’s ideas and leadership during his miniature tenure, one of the people said.
As previously reported by CNBC, in early May, Apollo and Sony formally expressed interest in acquiring Paramount for approximately $26 billion. However, Redstone favored a deal that would keep Paramount together, with Apollo and Sony planning to break up the company, CNBC previously reported.
