Paramount Global and Skydance have agreed on terms of a merger between the two entertainment companies that’s valued at $8 billion, according to a report.
Skydance, the media company founded by David Ellison, has agreed under the proposed deal with a Paramount special committee to pay $2 billion for Paramount’s parent company, National Amusements, which is controlled by majority stakeholder Shari Redstone, according to CNBC.
As part of the deal, Skydance will buy out nearly half of Paramount’s class B shares for $4.5 billion, $15 apiece — giving shareholders a stake in the newly formed company, according to Faber.
Skydance, which has the backing of private equity firms RedBird Capital and KKR, will also pay down Paramount’s debt by adding $1.5 billion in cash to the studio’s balance sheet, according to CNBC.
Redstone, whose company owns 77% of class A Paramount shares, must sign off on the deal, which will not require a vote from the shareholders — a condition that was part of the negotiations, according to CNBC reporter David Faber.
Paramount’s annual shareholder meeting will take place on Tuesday.
Skydance and Redbird will own two-thirds of Paramount while the remaining third will be controlled by class B shareholders.
Shares of Paramount were trading at more than 7.4% higher just after the opening bell on Wall Street on Monday.
In total, the deal is valued at $8 billion — up from about $5 billion under earlier terms discussed between Paramount and Skydance. Previously, Redstone would have received less than $2 billion for her stake, and the class B shareholders would have been bought out at $11 a share, CNBC previously reported.
In early May, Apollo and Sony had expressed interest in acquiring Paramount for about $26 billion and breaking up the company, CNBC previously reported. But Apollo and Sony reportedly have since backed off as Redstone favored a deal that would keep Paramount intact.
As negotiations have continued, Paramount’s C-suite also has been shuffled in recent months, with Bob Bakish stepping down as CEO in April. He was replaced by a trio of executives dubbed the “Office of the CEO.”
The three executives now in charge are CBS president and CEO George Cheeks; Chris McCarthy, president and CEO of Showtime/MTV Entertainment Studios and Paramount Media Networks; and Brian Robbins, the head of Paramount Pictures and Nickelodeon.
