Paramount Global’s Shari Redstone attends the Allen & Co. Media and Technology Conference in Sun Valley, Idaho, July 11, 2023.
David A. Grogan | David A. Grogan CNBC
Sony Pictures and private equity firm Apollo Global Management have sent letters Paramount Worldwide The board expressed interest in acquiring the company for about $26 billion, according to people familiar with the matter.
The expression of formal interest comes as David Ellison’s Skydance Media, backed by private equity firms RedBird Capital and KKR, awaits word from Paramount’s select committee on whether the group will agree. Recommend its bid to acquire the company Controlling shareholder Shari Redstone.
Skydance Media has not yet heard anything from the special committee but is expected to learn its recommendations on next steps as early as Thursday, people familiar with the matter said. Paramount’s panel may recommend approval or rejection of Skydance’s bid, or may propose alternatives or changes to the Skydance consortium.
Spokespeople for Paramount, Red Rock National Entertainment, Special Committee and Skydance declined to comment. Sony and Apollo did not immediately respond to requests for comment.
paramount choice
The parties could extend the exclusivity window that ends Friday if the special committee wants to continue talks with Skydance, or if Redstone wants more time to consider her options while still talking to Allison’s company. There’s also a chance Skydance will walk away from the deal, which has been in talks for months.
If Skydance leaves, Redstone will likely turn his attention to negotiating deals with Sony and Apollo that would provide a stock premium to all common shareholders.
Paramount Global shares rose more than 12% on news that Sony and Apollo had submitted a letter formally confirming their interest. New York Times and wall street journal.
Redstone initially rejected Apollo’s offer and instead entered into exclusive negotiations with Skydance. A person familiar with the matter said Redstone still hopes to strike a deal that would keep Paramount intact, like Skydance’s offer. Private equity firms may carve out value from companies through a series of divestitures.
The Sony-Apollo takeover bid would see Sony become the majority shareholder and Apollo a minority shareholder, according to a person familiar with the matter. It could also ease Redstone’s concerns that a new buyer could tear the company apart, as Sony is another major Hollywood company that also owns Sony Pictures.
Paramount Global’s $26 billion offer values the company above its current enterprise value of $22 billion.
Still, the special committee may want to review the financing details and ensure there will be no regulatory challenges to a merger with Sony, a non-U.S. entity. To do this, the special committee must notify the Skydance consortium that it wants to end its exclusive negotiations, which could result in Skydance being disqualified as a bidder, people familiar with the matter said.
The move will be welcomed by many Class B shareholders including Gamco, Matrix Asset Advisors and Aspen Sky Trust, who have all publicly expressed their disappointment with the Skydance deal. Skydance’s “best and final” offer includes merging its entertainment assets with Paramount, raising $3 billion to acquire common stockholders’ shares at a premium of about 30% to the unaffected $11 per share, And paid nearly US$2 billion to Redstone to acquire its controlling stake.
Redstone may also argue that she would prefer to advance Paramount Worldwide without a sale. Earlier this week, Board ousts Bob Bakish As CEO of the company. Appointing a new CEO and providing investors with a new plan for the future will be critical to appease restless rank-and-file shareholders, who may feel that an Apollo-Sony acquisition, if real, would be in their best interests.
