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Paramount shares jump as company reportedly close to agreeing a deal with Skydance

Published 06/03/2024, 10:06 PM
© Reuters

Investing.com -- Shares in Paramount Global (NASDAQ:PARA) jumped 7.5% at the market open Monday after CNBC's David Faber that David Ellison's Skydance Media is nearing a deal to acquire the mass media and entertainment giant. 

Approval is still needed from controlling shareholder Shari Redstone for a deal that could be announced "very soon," perhaps within 24 or 48 hours, according to Faber, citing sources familiar with the matter.

Under the proposed terms, Redstone would receive $2 billion for National Amusements, the parent company of Paramount. Moreover, Skydance plans to acquire 50% of B shares at $15 per share. Investors are set to inject $1.5 billion in cash into Paramount's balance sheet, with Skydance-RedBird poised to take a two-thirds stake in Paramount after the transaction closes.

The equity contribution from Skydance and RedBird amounts to $8 billion, Faber said. 

This marks the latest update to a WSJ report that emerged late Sunday, revealing that Skydance's updated offer includes an option to buy a specific amount of nonvoting shares in Paramount at approximately $15 each.

While Apollo Global and Sony (NYSE:SONY) Group had also submitted a preliminary bid for Paramount Global, recent reports suggest Sony's interest has diminished.

If realized, the tie-up would see Paramount, the group behind broadcaster CBS and cable channels like Nickelodeon and MTV, be brought together with Skydance, the maker of the hit film "Top Gun: Maverick."

An earlier plan called for Skydance to acquire National Amusements for $2 billion, and Paramount to buy Skydance in an all-stock transaction valued at $5 billion. Many shareholders, however, rejected the deal.

In a note to clients, analysts at Wells Fargo said the revised offer presents a "compelling opportunity" for Redstone to sell to Skydance. The move, they argued, would "make everyone reasonably happy and maintain the Paramount legacy."

"This week could mark the conclusion of a lengthy process," the Wells Fargo analysts said.

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