Monday, May 20, 2024

Sony and Apollo Declare Interest in $26 Billion Paramount Acquisition Amid Skydance Bid Contemplation

Sony Pictures and Apollo Global Management express formal interest in acquiring Paramount Global for $26 billion, amidst Skydance Media’s bid contemplation, as revealed by sources familiar with the matter.

Sony Pictures and private equity firm Apollo Global Management have officially communicated their desire to acquire Paramount Global, valuing the company at approximately $26 billion, according to insiders familiar with the situation.

The move follows Skydance Media, led by David Ellison and backed by RedBird Capital and KKR, awaiting feedback from Paramount’s special committee regarding its bid for the company, directed at controlling shareholder Shari Redstone. Although Skydance has yet to receive a response from the committee, expectations are high for forthcoming recommendations as early as Thursday.

Should negotiations with Skydance persist or if Redstone seeks additional deliberation time while engaging with Ellison’s entity, the parties might extend the exclusivity window beyond Friday. Conversely, Skydance might withdraw from the deal, opening doors for potential negotiations with Sony and Apollo, promising shareholders premium payouts.

Paramount Global shares surged by over 12% following reports of Sony and Apollo’s formal expression of interest, as initially disclosed by The New York Times and The Wall Street Journal.

Redstone, initially favoring Skydance’s proposal, still leans towards preserving Paramount’s integrity, a preference shared by other Class B shareholders, including Gamco, Matrix Asset Advisors, and Aspen Sky Trust. The proposition from Skydance entails merging entertainment assets, acquiring common shares at a premium, and compensating Redstone for her controlling stake.

However, the potential Sony-Apollo alliance, rendering Sony as the majority shareholder and Apollo as a minority holder, might alleviate concerns about Paramount’s fragmentation. This offer surpasses Paramount Global’s current enterprise value of $22 billion, signaling a promising prospect for shareholders.

Yet, the special committee is expected to scrutinize financial intricacies and address regulatory hurdles associated with merging with a non-U.S. entity like Sony. This could prompt the committee to terminate exclusive talks with Skydance, a move applauded by dissenting shareholders advocating for the Apollo-Sony bid’s consideration.

Redstone could argue for Paramount Global’s autonomy, especially after the recent CEO replacement, emphasizing the importance of devising a new strategic direction to appease shareholders. Ultimately, the unfolding developments underscore Paramount’s pivotal crossroads amidst competing bids and shareholder interests

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