Sony and Apollo Global Management have expressed their interest in acquiring Paramount Global for approximately $26 billion, as reported by sources familiar with the matter. This news comes as David Ellison’s Skydance Media, backed by RedBird Capital and KKR, awaits a decision from Paramount’s special committee regarding its bid for the company.
While Skydance is still waiting for a response from the special committee, it expects to receive their recommendations on the next steps as early as Thursday. The committee could recommend approving Skydance’s offer, rejecting it, or proposing alternatives or changes to the consortium. Paramount, Redstone’s National Amusements, and Skydance declined to comment on the matter, while Sony and Apollo have yet to respond to requests for comment.
If the special committee chooses to continue negotiations with Skydance, or if Redstone requires more time to consider her options with Ellison’s company, they may extend the exclusivity window that is set to end on Friday. However, if Skydance walks away from the deal, Redstone could turn her attention to negotiating with Sony and Apollo. This potential deal would provide common shareholders with a premium payout on their shares.
Upon hearing the news of Sony and Apollo’s formal expression of interest, Paramount Global’s shares rose by more than 12%. Initially, Redstone rejected an offer from Apollo in favor of exclusive talks with Skydance since she prefers a deal that would keep Paramount together. The fear is that a private equity firm would break up the company through divestitures to extract value. The Sony-Apollo offer would make Sony the majority shareholder and Apollo a minority holder, which could alleviate Redstone’s concerns since Sony is a significant player in Hollywood and already owns Sony Pictures.
The $26 billion offer values Paramount Global higher than its current enterprise value of $22 billion. However, the special committee would need to review financing details and ensure that there are no regulatory challenges associated with merging with Sony, a non-U.S. entity. To initiate this process, the committee would have to inform the Skydance consortium that it intends to end exclusive talks, potentially driving Skydance away as a bidder.
This move would be welcomed by Class B shareholders such as Gamco, Matrix Asset Advisors, and Aspen Sky Trust, who have publicly expressed dissatisfaction with the Skydance transaction. Skydance’s “best and final” offer involved merging its entertainment assets with Paramount, raising $3 billion to buy out common shareholders at a 30% premium, and paying Redstone nearly $2 billion for her controlling stake.
Alternatively, Redstone could argue that she is more comfortable moving forward with Paramount Global without a sale. The recent removal of Bob Bakish as the company’s CEO by the board suggests that installing a new CEO and presenting investors with a fresh plan would be crucial in appeasing common shareholders. These shareholders would likely argue that the Apollo-Sony bid, if legitimate, is in the best interest of Paramount Global’s shareholders.
In conclusion, the potential acquisition of Paramount Global by Sony and Apollo for $26 billion has generated significant interest and speculation. As the special committee considers its options and evaluates the different bids, the fate of the company remains uncertain. However, the possibility of Sony becoming a majority shareholder and Apollo becoming a minority holder could provide reassurance to Shari Redstone and help maintain the integrity of Paramount as a unified entity.
