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Skydance, the film studio behind Top Gun: Maverick, has entered exclusive talks with Shari Redstone to take control of her media company Paramount Global after it rebuffed a $26bn takeover offer from buyout firm Apollo, said people briefed about the matter.
David Ellison, who runs Skydance, has 30 days to reach a deal to buy National Amusements (NAI), Redstone’s privately owned cinema company that controls 77 per cent of Paramount’s voting stock.
Ellison and Redstone — members of two of America’s wealthiest families — have been trying for months to reach a deal that would merge Paramount with Skydance. The decision to enter exclusive talks highlights a desire by both parties to bring the negotiations to an end.
The move comes after Paramount’s board spurned a bid from Apollo to buy out all of the media group’s shareholders at a valuation of between $17 and $19.50 a share, according to people briefed on the matter. The $26bn value of Apollo’s takeover offer included debt.
Paramount’s share price was trading below $12 before The Wall Street Journal on Wednesday reported the exclusive talks with Skydance, but closed up 15 per cent at $13.52.
Apollo’s bid would equate to a premium of more than 44 per cent to Paramount’s closing share price on Tuesday.
In bidding for all of Paramount in cash, Apollo expected the media company’s debt, which stands at more than $16bn, would not need to be refinanced after a recent rating agency downgrade, making what would be one of the largest leveraged buyouts in the past decade easier to pull off, people familiar with the fund’s thinking.
Earlier this year, Apollo offered to buy Paramount’s film studio for about $11bn in cash. The FT later reported that Apollo’s offer was also rejected by Redstone, who has long preferred an arrangement with Ellison.
Redstone, who is president of NAI and non-executive chair of Paramount, believes that a deal with Ellison would make more strategic sense than selling to a financial buyer, according to several people familiar with the matter.
Redstone in 2020 inherited control of the entertainment conglomerate that her late father, Sumner Redstone, built over the past century.
Paramount is the studio behind some of the most legendary films and television shows, such as The Godfather, Titanic and Star Trek. But investors have soured on the group as it competes in a costly streaming battle with larger competitors such as Disney and Netflix.
Skydance and Apollo declined to comment, and Paramount did not immediately respond to a request for comment.
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