Posted in: Movies, Paramount+, streaming, TV | Tagged: paramount, Paramount Global, Skydance

Skydance Set for Paramount Global Takeover with $8B Investment Plan

Skydance Media (with RedBird Capital) and National Amusements Inc (NAI) are nearing the finish line on a deal for Paramount Global.

David Ellison's Skydance Media, Gerry Cardinale's RedBird Capital, and Shari Redstone's National Amusements Inc (NAI) had a very busy weekend, but it looks like they might be reaching the finishing line in terms of Skydance's attempts to acquire Paramount Global. With their temporary deal having received the blessing of a special committee of Paramount's board of directors and the full board, Skydance and its supporting backers will invest $8 billion in Paramount in what will be a two-part process – with the first step being acquiring Redstone's NAI (which controls nearly 80% of Paramount's voting shares, followed by the full merger (with the full deal expected to close during the first half of 2025). Once the deal is complete, Ellison will serve as chairman and CEO, with former NBCUniversal head Jeff Shell serving as the company's president.

Though we've included a rundown of the details of the deal below, here are some of the highlights. First, Skydance Investor Group (the Ellison family and RedBird Capital Partners) is investing $2.4 billion in cash to acquire NAI. The $4.5 billion in stock/cash merger consideration will be covered by publicly traded Class A shares (voting shares) and Class B shares – with Class A stockholders getting $23 per share and Class B stockholders getting $15 per share in cash/stock election. Skydance equity holders will receive 317 million Class B Shares valued at $15 per share. In addition, another $1.5 billion will be applied to Paramount's balance sheet to decrease its debt load.

Though not expected to play a factor, there is one thing to keep in mind. The agreement in play gives Redstone a 45-day window to field offers from other parties. Previously, Apollo Global Management (alone and with Sony Pictures), Barry Diller, and Edgar Bronfman Jr. have explored bids for Paramount Global – but it's not clear if they would entertain a challenge to Skydance's offer. Should Paramount go with another buyout deal, Skydance will receive a $400 million "breakup" fee.

Here's The Deal… Literally: Though not expected to play a factor, there is one thing to keep in mind. The agreement in play gives Redstone a 45-day window to field offers from other parties. Previously, Apollo Global Management (alone and with Sony Pictures), Barry Diller, and Edgar Bronfman Jr. have explored bids for Paramount Global – though it's not clear if they would entertain a challenge to Skydance's offer. With that said…

Skydance will merge with Paramount in a transaction that will reportedly value New Paramount at a value of approximately $28 billion. Existing Skydance investors will receive 317 million newly issued Class B shares in New Paramount valuing Skydance at $4.75 billion based on $15 per Paramount Class B share.

Skydance IG, led by the Ellison Family and RedBird Capital Partners, will invest up to $6 billion to:

• Offer Class A stockholders other than NAI an election to receive in the merger $23 cash per share or 1.5333 shares of Class B stock of New Paramount;
• Offer Class B stockholders other than NAI an election to receive in the merger $15 cash per share or one share of Class B stock of New Paramount, subject to proration if Class B elections exceed $4.3 billion in the aggregate (approximately 48% of the non-NAI float as of the date of this release);
• Use the additional capital to pay down existing debt and re-capitalize the balance sheet of New Paramount to support strategic initiatives.

The merger consideration represents a 48% premium to the price of the Class B stock as of July 1, 2024, and a 28% premium to the Class A stock on the same date. Also, by continuing to own shares of the new combined company, Paramount Class B stockholders will have the opportunity to participate in the new company's long-term value creation potential.

NAI and its owners have entered into a definitive agreement to sell NAI to Skydance IG for $2.4 billion on a cash-free, debt-free basis. Following completion of the transaction, only Skydance IG will hold Class A shares.

Following the close of the transaction and the growth equity investment and assuming full participation in the cash election by Class B stockholders, Class B stockholders will own approximately 30% of the outstanding equity of New Paramount and Skydance IG will own approximately 70% of the outstanding equity of New Paramount.

"In 1987, my father, Sumner Redstone, acquired Viacom and began assembling and growing the businesses today known as Paramount Global. He had a vision that "content was king" and was always committed to delivering great content for all audiences around the world. That vision has remained at the core of Paramount's success and our accomplishments are a direct result of the incredibly talented, creative, and dedicated individuals who work at the company," shared Redstone in a statement. "Given the changes in the industry, we want to fortify Paramount for the future while ensuring that content remains king. Our hope is that the Skydance transaction will enable Paramount's continued success in this rapidly changing environment. As a longtime production partner to Paramount, Skydance knows Paramount well and has a clear strategic vision and the resources to take it to its next stage of growth. We believe in Paramount, and we always will."

Ellison added, "This is a defining and transformative time for our industry and the storytellers, content creators, and financial stakeholders who are invested in the Paramount legacy and the longevity of the entertainment economy. I am incredibly grateful to Shari Redstone and her family who have agreed to entrust us with the opportunity to lead Paramount. We are committed to energizing the business and bolstering Paramount with contemporary technology, new leadership, and a creative discipline that aims to enrich generations to come."

Enjoyed this? Please share on social media!

Stay up-to-date and support the site by following Bleeding Cool on Google News today!