Sony Pictures and Apollo Global Management have officially expressed their interest in acquiring Paramount Global, proposing a deal valued at approximately $26 billion, according to sources familiar with the matter.
This formal expression of interest comes amidst the ongoing anticipation surrounding David Ellison’s Skydance Media, which, with backing from RedBird Capital and KKR, awaits a response from Paramount’s special committee regarding its bid for the company.
The committee’s decision, expected as early as Thursday, will influence the next steps in the acquisition process.
As of now, Skydance Media has not received any communication from the special committee. The committee could recommend either accepting or rejecting Skydance’s offer, or it may propose alternative options.
Paramount, National Amusements (Redstone’s company), the special committee, and Skydance have all refrained from commenting on the matter. Requests for comment from Sony and Apollo have not yet been responded to.
The situation presents several potential paths for Paramount. If the special committee favors further negotiations with Skydance or if Redstone desires more time for deliberation while continuing discussions with Ellison’s company, the parties could extend the exclusivity window, which is set to expire on Friday.
Conversely, if Skydance withdraws from the deal, Redstone may pivot towards negotiating with Sony and Apollo, a move that could yield a premium payout for common shareholders.
Reports of Sony and Apollo’s interest have significantly impacted Paramount Global’s stock, resulting in a more than 12% increase.
Initially, Redstone preferred exclusive negotiations with Skydance, favoring a deal that would preserve Paramount’s unity. Conversely, a private equity acquisition could lead to the dismantling of the company to maximize value.
Under Sony and Apollo’s proposal, Sony would become the majority shareholder, while Apollo would hold a minority stake. This arrangement might alleviate concerns about Paramount’s potential breakup, as Sony is a major player in Hollywood and the owner of Sony Pictures.
The $26 billion offer exceeds Paramount Global’s current enterprise value of $22 billion. However, the special committee would likely scrutinize the deal’s financing details and assess regulatory implications associated with merging with a foreign entity like Sony.
Informing the Skydance consortium of a potential end to exclusive talks could prompt Skydance to withdraw from bidding.
Notably, several Class B shareholders, including Gamco, Matrix Asset Advisors, and Aspen Sky Trust, have expressed dissatisfaction with Skydance’s proposal. Redstone might argue in favor of proceeding independently with Paramount Global, especially after the recent removal of Bob Bakish as CEO.
