The Paramount Studios in Los Angeles, California, USA on Monday, April 29, 2024.
Eric Thayer | Bloomberg | Getty Images
National Amusements has stopped talks with Skydance about a proposed merger Paramount GlobalThis meant that months of deal negotiations ended without a transaction.
National Amusements, owned by Shari Redstone, Paramount’s majority shareholder, had previously agreed on commercial terms to merge with a consortium that included David Ellison’s Skydance and private equity firms RedBird Capital and KKR. The deal was awaiting Redstone’s signing, CNBC previously reported. national amusements, which is controlled by Redstone, owns 77% of Paramount’s Class A shares.
Shares of Paramount closed down nearly 8% on Tuesday following the report.
National Amusements said in a statement Tuesday that it was “unable to reach mutually acceptable terms regarding the potential transaction with Skydance Media to acquire a controlling interest in NAI.”
“NAI is grateful to Skydance for its months of work in pursuing this potential transaction and looks forward to continued successful production collaboration between Paramount and Skydance,” the statement said.
Redstone’s company said it “supports the recently announced strategic plan being implemented by Paramount’s CEO’s office, as well as their ongoing work and that of the company’s Board of Directors, to continue to explore opportunities to drive value creation for all Paramount shareholders.” .”
Paramount declined to comment. Spokespeople for Skydance and Redbird did not immediately respond to requests for comment.
The Wall Street Journal previously reported that the talks had ended.
“Although National Amusements had agreed to the economic terms offered by Skydance, there were other outstanding terms on which they could not agree,” an NAI spokesman said.
There was disagreement over why the talks failed to reach an agreement, according to people familiar with the matter, highlighting the nature of the process that has been going on for months with various twists and turns.
Redstone and the special committee had required a so-called majority of minority votes as part of the deal, a clause that the Skydance bidding consortium found unacceptable and unworkable long into the deal negotiations, according to people familiar with the matter. The special committee approval process meant to determine the fairness of the deal made such a vote unnecessary, say those familiar with Ellison’s thinking.
The Skydance bidding consortium instead blamed Redstone’s inability to let go of a family fortune, her desire for more money for NAI, and private comments by Paramount board member Charles Phillips that were critical of David Ellison as likely reasons for the deal’s collapse, say the company familiar people subject. A spokesman for Phillips declined to comment.
The Special Committee of Paramount Global’s Board of Directors said: “The Special Committee met on Tuesday to discuss the progress of discussions regarding a potential transaction with Skydance Media. At this time, the Special Committee was briefed by a representative of National Amusements, Inc..” that there was no agreement on a deal with Skydance Media and provided no further path for this transaction. The special committee did not vote on a possible transaction.
Go forward
The about-face in the proposed deal comes not only days after Skydance and Paramount agreed to merger terms, but also after Paramount’s annual shareholder meeting, at which the company’s leadership outlined plans for the future.
Last week, Paramount’s current leadership, the so-called “Office of the CEO” – George Cheeks, CEO of CBS, Chris McCarthy, CEO of Paramount Media Networks, and Brian Robbins, CEO of Paramount Pictures – outlined the company’s strategic priorities for the In this case, it is determined that the company will not be sold.
The shared leadership structure was introduced in late April when former CEO Bob Bakish resigned.
The trio unveiled a plan that included exploring streaming joint venture opportunities with other media companies, cutting $500 million in costs and divesting non-core assets. The plan presented to shareholders was Redstone’s alternative option in the event it decided not to sell.
While Redstone pointed out the leadership team’s unorthodox structure at the start of the shareholder presentation, she expressed her support. She has endorsed her ideas and leadership skills during her short tenure, CNBC previously reported.
Redstone controlled the future of Paramount and whether a sale would take place. She can now consider other offers for National Amusements from outside buyers.
In May, another potential buyer for Paramount emerged – Apollo Global Management and Sony, which formally expressed interest in acquiring the company for $26 billion, as CNBC previously reported. However, Redstone favored a deal that would keep the company together, and Apollo and Sony planned to break up Paramount and separate the film studio from other parts of the company, including the broadcast network, CNBC previously reported.
Under those terms, which were still being clarified as of Tuesday, Redstone would have received $2 billion in cash for National Amusements, CNBC reported. Skydance would buy nearly 50% of Paramount’s Class B shares for $15 apiece, or $4.5 billion, leaving holders with equity in the new company. Skydance and RedBird also contributed $1.5 billion in cash to help reduce Paramount’s debt.
The plan laid out last week by Paramount’s three executives emphasized deleveraging and returning the company to an investment-grade rating after it was downgraded to junk status earlier this year. Paramount had about $14.6 billion in long-term debt as of March 31.
Source link
2024-06-12 00:42:45
www.cnbc.com
