June 14, 2024

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Shari Redstone ends talks with Skydance Media over deal to control Paramount

Shari Redstone ends talks with Skydance Media over deal to control Paramount

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Shari Redstone has ended talks with Skydance Media over a deal that would have handed control of her family's Paramount entertainment empire to billionaire David Ellison.

The decision closes the books on talks with Ellison's Skydance that have dragged on for months and left Paramount's future hanging in the balance.

Skydance offered about $2 billion to acquire Redstone's National Amusements (NAI), then planned to merge Paramount into Ellison through a stock deal.

Skydance has offered to buy out about half of Paramount's common shareholders at $15 a share, while also injecting about $1.5 billion to help pay down the company's debt.

The NAI said on Tuesday that the two groups “were unable to reach mutually acceptable terms” and that it was “grateful to Skydance for the months of work it has put into pursuing this potential transaction.”

A Skydance representative declined to comment. Paramount shares closed 8 percent lower at $11.04 after the news, which was first reported by The Wall Street Journal.

Redstone's decision came as a shock to Ellison's camp, which included private equity backers RedBird and KKR, as the two sides appeared on the verge of reaching an agreement in recent weeks.

Paramount's special committee, which was responsible for representing the interests of all of the media company's shareholders, including those without voting rights, backed the bid in a nonbinding endorsement earlier this month, people familiar with the matter said.

Redstone changed its mind in recent days, in part because Skydance reduced the amount of cash that would have gone to NAI's holding company as it increased payments to other shareholders, people familiar with the matter said.

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People close to the talks said they were surprised by her decision to pull the plug. Ellison's consortium agreed “pretty much” everything NAI and Paramount asked for over several months of negotiations, these people added.

A special board committee met Tuesday to discuss Skydance's proposal, only to be informed by an NAI representative that there was no deal. The person added that there is no expectation “for this deal to move forward,” according to a statement from committee members.

Redstone is now examining potential offers from other suitors.

Billionaire Edgar Bronfman Jr., heir to Seagram's Beverage Co., has expressed interest in acquiring NAI for more than $2 billion, according to two people familiar with the matter. Its bid is backed by private equity group Bain. But these people cautioned that this group will need weeks to complete due diligence before making a formal offer.

Redstone has also received interest from film producer Steven Ball, one of the people said.

However, one person involved in the discussions said there is no real alternative to Skydance at the moment.

NAI controls about 80 percent of Paramount's voting rights despite owning only about 10 percent of the company's shares. Whoever buys NAI could technically take control of Paramount without having to buy the entire company, although non-voting shareholders could challenge such a move in the courts.