Skydance Makes ‘Best and Last’ Offer to Paramount to Try and Close Merger Deal
The revised offer has been presented to the Paramount board as Skydance tries to gain the approval of company shareholders.
There may not be a need for an investor revolt at Paramount Global to try and stop the company from merging with Skydance Media. Multiple shareholders have raised questions about a plan for Skydance to pay Paramount's controlling shareholder $2 billion for her stake in the company, which caused concern because of its potential to dilute the shares of every other Paramount stakeholder. But a Monday report from Deadline indicates that Skydance has revised its offer for Paramount to make the deal easier to stomach for Paramount’s shareholders not named Redstone.
Key Details:
- A dividend or stock repurchase had been discussed as a way to satisfy nervous Paramount shareholders in the past.
- The request for a new offer originated with Redstone’s holding company National Amusements Inc.
- Paramount’s exclusive negotiating window with Skydance is set to close on May 3, though an extension is possible.
Terms of the updated offer to Paramount weren’t immediately available, but they’re almost certain to include more consideration for Paramount shareholders other than primary owner Shari Redstone. Bloomberg reported in early April that negotiators were discussing a stock buy-back or a dividend to make it a more desirable deal for other Paramount investors, so perhaps Skydance’s revised offer includes one of these provisions.
Redstone stands to make around $2 billion for her 77% of Paramount’s voting stock. That stock is owned through the Redstone’s holding company National Amusements Inc., which originated the request for a new offer from Skydance to help mollify the company’s other investors, according to Deadline.
Mario Gabelli’s firm GAMCO Investors holds more Paramount stock than anyone except National Amusements, and this revised offer could be aimed specifically at his various Paramount-owning clients. Gabelli has been a vocal opponent of the Skydance deal and has threatened to sue if his clients don’t get good value from a future deal between Paramount and Skydance.
When Will the Skydance/Paramount Merger Close?
Paramount and Skydance first entered into an exclusive negotiating window in early April, which is set to expire on May 3. However, late last week reports circulated that Skydance had requested a two-week extension of the exclusive period in order to get a deal closed, which could potentially allow Paramount to agree to a new carriage deal with Charter Communications.
The closing of the deal will likely happen without the ascent of current Paramount CEO Bob Bakish. Bakish is likely to resign from Paramount as early as Monday, which could be a sign that the two companies believe they’re nearing a final deal. Bakish has opposed the Paramount/Skydance merger in private, raising concerns that it did not adequately compensate all Paramount shareholders.
If the merger of Paramount and Skydance falls through, there is at least one interested party still waiting in the wings. Sony and Apollo Global Management have reportedly held discussions about making a bid for Paramount if the deal falls through; Apollo has already made two offers for various Paramount assets, but neither was considered viable by Paramount’s special committee for discussing M&A opportunities.
The revised Skydance offer has been characterized as its “best and last” attempt to make a deal with Paramount, and Redstone certainly seems amenable. Now, it’s up to Paramount shareholders to read the new offer and see if it provides the value they need, or if they’ll dig in their heels and try to fight the transaction even after the revised term sheet has been put on the table.
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