Paramount Global and Skydance Media are advancing in negotiations towards a potential merger, aiming to acquire controlling shareholder Shari Redstone’s stake, sources familiar with the matter disclosed.
The special committee at Paramount Global is responsible for evaluating proposals, along with Skydance Media led by David Ellison.
Supported by private equity firms KKR and RedBird Capital Partners, they are in the process of determining the valuation of Skydance’s assets for the merger and strategizing the infusion of equity into the combined entity through a recapitalization.
Negotiations are nearing agreement on Skydance’s valuation, with the entertainment company estimated to be valued at approximately $5 billion post-merger with Paramount Global.
Skydance CEO David Ellison, in collaboration with private equity partners, aims to secure approximately $4.5 billion to $5 billion in fresh equity, with a significant portion allocated towards compensating Shari Redstone and debt reduction.
The prospective buyers are aiming to finalize the deal by May, although the process experienced some delay due to Paramount Global’s delayed provision of data during due diligence, pushing the timeline slightly behind schedule.
The Skydance consortium is seeking a two-week extension beyond the May 3 exclusivity window for merger discussions.
In the event of a successful merger, Skydance intends to appoint David Ellison as CEO of Paramount Global, with former NBCUniversal CEO Jeff Shell slated to serve as president, resulting in the departure of Paramount CEO Bob Bakish.
In parallel, Apollo Global Management and Sony have initiated preliminary discussions concerning a potential collaboration to acquire Paramount Global’s outstanding shares at a premium.
However, the special committee views Skydance’s proposal as the preferred option due to its potential to offer future value to shareholders while maintaining the company’s public status with a cleaner balance sheet.
Paramount Global’s ongoing renewal agreement with Charter Communications for CBS and its cable networks poses a significant obstacle to the deal’s progress, with the outcome potentially impacting Paramount Global’s valuation.
The agreement deadline is set for April 30, with Paramount Global’s first-quarter earnings report scheduled for April 29.
Despite the complexities involved, negotiations continue, with Paramount Global CEO Bob Bakish going through the renewal discussions with Charter Communications while simultaneously considering the implications of the potential Skydance merger.
