Shari Redstone’s National Amusements Says It Has Ended Talks With Skydance About Paramount Merger

After more than six months of on-again-off-again talks, Shari Redstone has ended negotiations with David Ellison‘s Skydance Media about a prospective merger with Paramount Global

Published Time: 12.06.2024 - 00:31:29 Modified Time: 12.06.2024 - 00:31:29

After more than six months of on-again-off-again talks, Shari Redstone has ended negotiations with David Ellison‘s Skydance Media about a prospective merger with Paramount Global.

Redstone is Paramount Global’s controlling shareholder through National Amusements Inc., which owns 77% of the voting shares in Paramount.

In a statement, Redstone’s NAI said, “National Amusements, Inc., the majority voting shareholder of Paramount Global, today announced that they havenot been able to reach mutually acceptable termsregarding the potential transaction withSkydance Mediafor the acquisition of a controlling stake in NAI.”

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The statement continued, “NAI is grateful to Skydance for their months of work in pursuing this potential transaction and looks forward to the ongoing, successful production collaboration between Paramount and Skydance.

“NAI supports the recently announced strategic plan being executed by Paramount’s Office of the CEO as well as their ongoing work and that of the Company’s Board of Directors to continue to explore opportunities to drive value creation for all Paramount shareholders,” the company said.

A rep for Skydance Media declined to comment. NAI’s decision to end talks with Skydance was first reported by the Wall Street Journal.

Redstone, daughter of late media mogul Sumner Redstone, and Ellison, son of Oracle founder and megabillionaire Larry Ellison, were ultimately unable to reach an agreement on the terms of a complex transaction that would have turned over control of Paramount Global to Skydance and its private-equity partners, RedBird Capital Partners and KKR.

Amid the chaos and uncertainty over the protracted negotiations among NAI, Paramount, and Skydance and its team, others have emerged to potentially scope out an acquisition of National Amusements alone (instead of trying to construct a deal that also comprises Paramount Global). Those include Edgar Bronfman Jr. and Bain Capital, which are considering a bid of up to $2.5 billion for NAI, as well as producer and filmmaker Steven Paul, who was behind the “Baby Geniuses” movie franchise.

Could Redstone decide that Paramount Global — even with its nearly $15 billion in debt (which recently was cut to junk status) and declining TV business — can go it alone? Tuesday’s statement from NAI suggests that is a possibility.

At Paramount Global’s shareholder meeti -

ng on June 4, the three execs running the company in the newly established Office of the CEO — George Cheeks, president and CEO of CBS;Chris McCarthy, president and CEO, Showtime/MTV Entertainment Studios and Paramount Media Networks; andBrian Robbins, president and CEO of Paramount Pictures and Nickelodeon— presented a strategy for the company that didn’t envision a new owner. The trio spoke abouthow they plan to cut upwards of $500 million in costsannually through layoffs and other cost-reduction measures, pursue a joint venture with Paramount+ and potentially sell some assets.

On Monday, Paramount extended change-in-control severance benefits to Cheeks, McCarthy and Robbins that kick in if the company transacts a sale or merger, and also granted the three co-CEOs bonuses for the time during which they serve in the office. Redstoneoutsted former CEO Bob Bakish on April 30, reportedly over Bakish’s clash with Redstone over pursuing the deal with Skydance.

Skydance’s last offer was approved earlier this month by Paramount Global’s special committee established to evaluate M&A offers, and it was submitted to Redstone for consideration last weekend. Under those proposed terms, the Skydance consortium would have paid Redstone about $2 billion for NAI and current Paramount Class B shareholders (who do not have voting rights) would have been able to cash in nearly half their shares for $15 per share. The Skydance group also would have paid $1.5 billion in cash to help pay down Paramount’s debt. After the merger of Paramount Global and Skydance, the Skydance consortium would have owned about two-thirds of the shares in Paramount as a public company.

Shares of Paramount’s Class B shares fell 7.9% Tuesday, closing at $11.04 per share, after news broke of NAI’s rejection of Skydance’s merger proposal.

Meanwhile, Sony Pictures and private-equity firm Apollo Global Management emerged as joint bidders for Paramount Global, floating anoffer of $26 billion(including assumption of debt) last month. However, Sony and Apollo have since backed away from pursuing a deal for Paramount in its entirety.

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