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

Author: Editors Desk, Anna Nicolaou and James Fontanella-Khan in New York and Christopher Grimes in Los Angeles Source: Financial Times
June 12, 2024 at 11:44
Shari Redstone, pictured, has ended talks with Skydance Media over a merger that would have handed control of Paramount from her family to billionaire David Ellison © Bloomberg
Shari Redstone, pictured, has ended talks with Skydance Media over a merger that would have handed control of Paramount from her family to billionaire David Ellison © Bloomberg

Decision to halt chaotic sale process has left future of storied Hollywood group hanging in the balance

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

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

Skydance had offered about $2bn to acquire Redstone’s National Amusements (NAI), and then planned to merge Paramount into Ellison’s company through a stock deal.

Skydance had offered to buy out about half of Paramount’s common shareholders at $15 a share, while also injecting about $1.5bn to help pay off the company’s debt.

NAI on Tuesday said the groups “have not been able to reach mutually acceptable terms” and that it “is grateful to Skydance for their months of work in pursuing this potential transaction”.

A Skydance representative declined to comment. Shares in Paramount closed down 8 per cent at $11.04 on 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 close to a deal in recent weeks.

Paramount’s special committee, which was in charge of representing the interests of all of the media company’s shareholders, including those without voting rights, supported the bid in a non-binding endorsement earlier this month, said people briefed about the matter.

Redstone changed her mind in recent days, in part because Skydance lowered the amount of cash that would have gone to holding company NAI as it increased the payout to other shareholders, said a people briefed on the matter.

People close to the talks said they were stunned by her decision to pull the plug. These people added the Ellison consortium had agreed to “pretty much” everything NAI and Paramount had asked for over multiple months of negotiations.
The board’s special committee met on Tuesday to discuss the Skydance proposal, only to be informed by an NAI representative that there was no deal. The person added that there was no expectation of “a path forward on this transaction”, according to a statement from the directors on the committee.

Redstone is now weighing potential offers from other suitors.
Billionaire Edgar Bronfman Jr, the heir of the Seagram drinks business, has signalled his interest in acquiring NAI for more than $2bn, according to two people familiar with the matter. His bid is backed by private equity group Bain. But that group would require weeks to complete due diligence before making a formal offer, these people cautioned.

Redstone has also received interest from film producer Steven Paul, one person said.

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

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

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