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National Amusements, which controls Paramount Global (NASDAQ: PAR) through a voting share and owns a chain of cinemas, is in exclusive talks to sell itself to Skydance Media.
Under the terms of an agreement being discussed between Shari Redstone’s National Amusements and Skydance, Redstone’s company would receive more than $2 billion in cash as part of the first phase of the transaction, according to a WSJ report late Friday, which cited familiar people.
After the deal with National Amusements, Paramount (PARA), would acquire Skydance in an all-stock deal worth about $5 billion, according to the WSJ. Separately, Skydance could provide a “substantial” cash infusion to Paramount to help its balance sheet and pay down debt.
Under the terms being discussed, Redstone would receive cash, while investors with non-voting shares would get shares in the combined company and end up with a diluted shareholding, the WSJ said.
CNBC’s David Faber reported Thursday that under the contemplated plan, Paramount would need to raise up to $3 billion in new equity (PARA), reiterating his report from late February. Skydance’s David Ellison and his partners would come forward for a “good amount” of that capital, but it would be “dilutive.”
CNBC also reported Friday that Ellison is interested in taking a substantial minority stake (about 45%) or a small majority stake by merging its studio operations with the iconic Hollywood brand and seeking new equity alongside its partners , RedBird Capital Partners, and KKR.
Paramount stock has been on the move over the past week as stories swirl about a potential deal. The company’s Class B non-voting shares (PARA) on Friday fell by 3.2%—the newly issued shares would have dilutive effects for economic shareholders, while the class with voting rights A (NASDAQ: PARAA) gained 1.7%.
Redstone has reportedly reached a tentative agreement to sell its stake in Skydance, while Paramount has also reportedly considered offers of $26 billion from Apollo Global Management (APO) and offers from entrepreneur Byron Allen and Warner Bros. Discovery (WBD).