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Skydance, the movie studio behind it Top Gun: nonconformisthas entered into exclusive talks with Shari Redstone to take control of her media company Paramount Global after the latter rejected a $26 billion takeover offer from buyout firm Apollo, people familiar with the matter said.
David Ellison, who runs Skydance, has 30 days to reach a deal to buy National Amusements (NAI), the privately held Redstone film company that controls 77% of Paramount’s voting shares.
Ellison and Redstone, members of two of America’s richest families, have been trying for months to reach a deal that would merge Paramount with Skydance. The decision to enter into exclusive negotiations highlights the desire of both sides to put an end to the negotiations.
The move comes after Paramount’s board rejected Apollo’s offer to buy out all of the media group’s shareholders at a valuation of between $17 and $19.50 a share, according to people familiar with the matter. The $26 billion value of Apollo’s takeover offer included debt.
Paramount’s stock price was trading below $12 before The Wall Street Journal on Wednesday reported exclusive talks with Skydance, but it closed up 15% at $13.52.
Apollo’s offer would amount to a premium of more than 44% to Paramount’s closing stock price on Tuesday.
By bidding for all of Paramount in cash, Apollo expected that the media company’s debt, which totals more than $16 billion, would not need to be refinanced after the ratings agency’s recent downgrade, making what would be one of the largest leveraged buyouts of the past. decade easier to achieve, people familiar with the bottom’s thinking.
Earlier this year, Apollo offered to buy Paramount’s movie studio for about $11 billion in cash. The FT later reported that Apollo’s offer was also rejected by Redstone, who has long preferred a deal with Ellison.
Redstone, chairman of NAI and non-executive chairman of Paramount, believes a deal with Ellison would make more strategic sense than selling to a financial buyer, according to several people familiar with the matter.
Redstone in 2020 inherited control of the entertainment conglomerate that his late father, Sumner Redstone, built over the last century.
Paramount is the studio behind some of the most legendary films and television shows, such as The Godfather, Titanic AND Star Trek. But investors have soured on the group as it competes in a costly streaming battle with larger rivals such as Disney and Netflix.
Skydance and Apollo declined to comment, and Paramount did not immediately respond to a request for comment.