With Paramount’s fate at stake, its main suitor has just upped the ante.
Skydance, which has been in talks to merge with Paramount for months, offered in recent days to provide the combined company with a $3 billion cash injection that it can use to pay down debt and buy back shares, according to two people with knowledge of the matter. . proposal.
The revised offer is aimed at calming investors who have come out against the deal in recent weeks, saying it would enrich Shari Redstone, Paramount’s controlling shareholder, at the expense of other investors.
Paramount has been in talks about a deal with film studio Skydance for months, after Redstone decided late last year to consider selling his media empire. The company has since drawn interest from suitors such as Apollo, the private equity giant, and Skydance, which is proposing a merger.
Skydance is proposing to buy shares from Paramount shareholders at a premium in hopes of further appeasing investors, one of the people said. Redstone was already set to earn a premium for its shares, due to its majority stake. Under one scenario being discussed, Skydance could ask Redstone to accept less cash as part of the deal and retain more of its equity in Paramount.
The terms of the new deal would provide Paramount shareholders with a $3 billion investment from RedBird, one of Skydance’s biggest backers, and the family of David Ellison, CEO of Skydance and son of Larry Ellison, founder of Oracle. . Skydance, a media company founded by the younger Ellison, already has a relationship with Paramount, having helped produce hits like “Top Gun: Maverick” and “Mission Impossible: Dead Reckoning.”
Paramount declined to comment.
Negotiations are now likely to focus on how that infusion should be used. The special committee of Paramount’s board negotiating the deal, which has been focused on getting the best deal for all shareholders, would prefer to use most of that cash to offer incentives to shareholders, such as buying back their shares at a favorable. Skydance would prefer that most of that cash injection be used to pay down debt, to put the combined company on firmer financial footing. The company’s significant debt load was recently written down.
Skydance’s sweetened offer comes at a delicate moment in the negotiations. A deadline is looming for Skydance to negotiate exclusively with Paramount, putting pressure on Skydance to make its best case for merging with the company. Paramount’s special committee pushed for improved conditions last week, and Skydance responded over the weekend.
In response, Skydance made an effort to meet all of the Paramount special committee’s demands, but there is still some daylight between the two companies.
Paramount is dealing with turmoil at its top. The relationship between Redstone and Bob Bakish, Paramount’s chief executive, has deteriorated and he is expected to resign this week. Paramount has contemplated replacing Bakish with an “office of the CEO” led by three division heads: Brian Robbins, head of Paramount’s film studio; George Cheeks, CEO of CBS; and Chris McCarthy, president of youth and entertainment brands at Paramount.