Paramount and Skydance agree to terms of a merger deal

The Paramount logo is displayed at Columbia Square along Sunset Blvd in Hollywood, California on March 9, 2023.

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Paramount and Skydance have agreed to terms of a merger, which will likely be announced in the coming days, CNBC’s David Faber reported Monday.

A Paramount special committee and the buying consortium — David Ellison’s Skydance, backed by private equity firms RedBird Capital and KKR — agreed to the terms. The deal is awaiting signoff from Paramount’s controlling shareholder, Shari Redstone, who owns National Amusements, which owns 77% of class A Paramount shares, Faber said Monday.

The agreement comes after weeks of discussion and after a recent competing offer from Apollo Global Management and Sony Pictures.

The deal currently calls for Redstone to receive $2 billion for National Amusements, Faber reported Monday. Skydance will buy out nearly 50% of class B Paramount shares at $15 apiece, or $4.5 billion, which will leave the holders with equity in the new company.

Skydance and RedBird will also contribute $1.5 billion in cash to Paramount’s balance sheet to help reduce debt.

Following the close of the deal, Skydance and Redbird will own two-thirds of Paramount, and the class B shareholders will own the remaining third of the company, Faber reported. The negotiated terms were earlier reported by The Wall Street Journal.

The deal will not require a vote from the shareholders, which was part of the negotiations, Faber reported. Paramount’s annual shareholder meeting will take place on Tuesday.

In total, the deal is valued at $8 billion, an increase from what was initially on the table. Earlier, the offer from Skydance was valued at about $5 billion. Under those earlier terms, Redstone would have received less than $2 billion for her stake, and the class B shareholders would have been bought out at a nearly 30% premium at $11 a share, CNBC previously reported.

In early May, Apollo and Sony formally expressed interest in acquiring Paramount for about $26 billion, CNBC previously reported. However, Redstone has favored a deal that would keep Paramount together, and Apollo and Sony planned to break up the company, CNBC previously reported.

Besides the twists and turns of the negotiations with buyers, Paramount’s C-suite has also undergone a shakeup in recent months.

Bob Bakish stepped down as CEO in late April, and was replaced by what the company calls the “Office of the CEO.” Paramount is now led by three executives: 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.

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