Paramount CNBC’s David Ferber reported on Monday that the company and Skydance have agreed to merger terms, and Ferber said a deal could be announced soon.
Paramount’s special committee and the buyout consortium — private equity firms Redbird Capital and David Ellison’s Skydance, backed by KKR — have agreed to the terms, and Faber said Monday they are awaiting approval from Shari Redstone, owner of National Amusements and Paramount’s controlling shareholder, who owns 77 percent of Paramount’s Class A shares.
The terms of the agreement were reached following several weeks of discussions and recent competing proposals from Apollo Global Management and Sony Pictures.
“We received and are currently reviewing the financial terms of Paramount and Skydance’s proposed transaction last weekend,” a National Amusements spokesman said.
Faber reported Monday that the deal now calls for Redstone to receive $2 billion for National Amusements, while Skydance will buy about 50% of Paramount’s Class B stock for $15 a share, or $4.5 billion, with holders retaining an equity stake in the new company.
Skydance and Redbird will also contribute $1.5 billion in cash to Paramount’s balance sheet to help reduce debt.
Faber reported that once the deal closes, Skydance and Redbird will own two-thirds of Paramount, with Class B shareholders owning the remaining third. Terms of the negotiations were reported earlier by The Wall Street Journal.
The deal does not require a shareholder vote, which was part of the negotiations, according to Farber’s report. Paramount’s annual shareholder meeting is scheduled for Tuesday.
The $8 billion bid is an increase from a previous offer of $5 billion. Under the previous terms, Redstone would have received less than $2 billion for his stake, and Class B shareholders would have been bought out at $11 a share, a nearly 30% premium, CNBC previously reported.
No deal is expected to be announced before the meeting, said the people, who asked not to be identified because the discussions are private.In addition to the twists and turns in negotiations with a buyer, Paramount’s management team has also undergone a major shake-up 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, head of Paramount Pictures and Nickelodeon.
They are scheduled to lay out their strategic priorities at the company’s annual meeting on Tuesday. The interim leaders are expected to make another announcement at a scheduled board meeting Tuesday afternoon, the people said. Mr. Redstone has approved of the triumvirate’s thinking and leadership during his short tenure, one of the people said.
CNBC previously reported that Apollo and Sony had formally declared their intention to buy Paramount for about $26 billion in early May, but Redstone wanted a deal that would keep Paramount alive, and Apollo and Sony planned to split the company up, CNBC previously reported.
