Shares of Paramount Global (PARA) fell nearly 8% on Tuesday after Shari Redstone, who controls Paramount through family holding company National Amusements (NAI), ended merger talks with Skydance Media, NAI confirmed in a statement.
As first reported by Wall Street JournalRedstone will now likely pursue the sale of NAI only, rather than attempting to merge Paramount into another company. Hollywood producer Steven Paul reportedly expressed interest, alongside a media executive Edgar Bronfman Jr..
This is a surprising development, given that a special independent committee of Paramount’s board recently recommended the economics of the Skydance deal after months of talks. The Journal reported that the committee was scheduled to vote Tuesday afternoon on Paramount’s merger with Skydance.
In a statement, National Amusements said it was unable “to reach mutually acceptable terms regarding the potential transaction with Skydance Media to acquire a majority interest in NAI.”
“NAI is grateful to Skydance for the months of work it has put into pursuing this potential transaction and looks forward to the continued successful production collaboration between Paramount and Skydance,” the statement said. She will continue to support and “explore opportunities to generate value for all Paramount shareholders.” Paramount declined to comment.
Aside from Skydance, other parties interested in Paramount include Sony Pictures Entertainment and private equity firm Apollo Global Management, as well as Discovery Warner Bros. (WBD), media mogul Byron Allen and others. (Disclosure: Yahoo Finance is owned by Apollo.)
Notably, Shari Redstone had always favored the Skydance deal over other offers, according to multiple reports.
Skydance, which has previously collaborated with Paramount on the production of popular film franchises including “Mission Impossible,” “Top Gun: Maverick” and “Transformers,” revised its offer on several occasions after non-voting shareholders expressed concerns about the terms of its first transaction, valued at $5 billion.
The latest offer, valued at $8 billion, included Shari Redstone’s sale of National Amusements’ majority stake in Paramount for about $2 billion, according to CNBC. National Amusements owns approximately 10% of Paramount’s equity value and retains 77% of the voting stock.
Backed by private equity firms RedBird Capital and KKR, Skydance then reportedly merged its studio operations with those of Paramount at a reported price valuing the former media giant at just under $5 billion. Skydance and its subsidiaries have also reportedly proposed a $1.5 billion cash infusion to help reduce Paramount’s debt, the report adds.
Skydance offered to buy about half of…
