(Bloomberg) — Shares of Paramount Global jumped for the biggest jump in two months on Wednesday after a merger deal with independent film and TV producer Skydance Media was revived.
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Skydance, led by the son of the co-founder of Oracle Corp. Larry Ellison’s David Ellison has reached a tentative agreement to buy Shari Redstone’s National Amusements Inc. for $1.75 billion and merge with CBS and MTV parent Paramount, according to a person with knowledge of the matter. subject.
National Amusements, the family company that controls Paramount, will forward the deal to a special committee of Paramount directors for review, said the person, who asked not to be identified discussing a deal that has not been disclosed. An announcement could be made as early as Friday, provided negotiations do not falter again.
Paramount shares rose as much as 13% to $12.13 in opening trading in New York on Wednesday. They were up 6.9% at 1:52 p.m.
The deal follows the collapse last month of negotiations between Skydance and National Amusements. The two met again last week, with discussions gaining momentum on Tuesday, the person said.
The new terms include a higher valuation for National Amusements and stronger language to indemnify the Redstones’ company against litigation that could result from the deal, the person said. National Amusements also no longer insists that the merger be approved by a majority of non-Redstone shareholders, a point of contention in recent negotiations.
Sellers have 45 days to seek better offers, another person familiar with the matter said, and other offers could emerge.
Paramount, Skydance and National Amusements declined to comment.
“The Paramount/Skydance deal has been discussed ad nauseam for about 7 months now and the fact that this is still the only serious deal on the table to date says a lot about Paramount’s strategic choices,” Kannan Venkateshwar, analyst at Barclays. Capital, he wrote in a note to investors.
An earlier iteration proposed by Ellison and his partners, including RedBird Capital Partners and KKR & Co., offered to buy National Amusements for about $2 billion in cash and inject $1.5 billion into Paramount’s balance sheet to pay down debt. The film and TV company’s long-term loans exceed $14 billion. The Ellison group reportedly contributed $4.5 billion in additional funds to purchase shares of Paramount.
The investments would represent a significant potential lifeline for Paramount, which has struggled to compete as consumers abandon movie theaters and cable TV in favor of streaming. The company had a net loss of $554 million, or 87 cents per share, in the first quarter.
Paramount is also in exclusive talks to sell its Black Entertainment Television network to buyers including BET CEO Scott Mills and Chinh Chu, who runs New York-based private equity firm CC Capital, Bloomberg News reported. .
The group has been discussing an offer of $1.6 billion to $1.7 billion, according to people familiar with the matter who requested anonymity to disclose information that is not public.
Bonds and credit insurance linked to Paramount also rallied following news of the preliminary agreement. The cost of insuring Paramount against default fell the most in eight months, while its 4.2% notes due 2032 shrank 45 basis points to 238 basis points above the benchmark.
–With assistance from Hannah Miller, Thomas Buckley and Michael Tobin.
(Updates with terms of agreement in second paragraph)
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