Paramount Global and Skydance Media, spearheaded by David Ellison—son of Oracle's Larry Ellison—announced their merger via an all-stock transaction late Sunday, establishing a combined entity, New Paramount, with an estimated enterprise value of $28 billion.
In pre-market trading on Nasdaq, Paramount Global shares climbed 4.7%, reaching $12.37. Paramount's market value stood at $8.22 billion as of the preceding Friday.
Post-merger, Ellison aims to revitalize Paramount, enhancing profitability, ensuring creator stability and independence, and boosting investments in digital platforms.
The merger, negotiated over several months, will progress through a two-step process: first, the acquisition of Paramount's parent, National Amusements, Inc. (NAI), followed by the amalgamation of Skydance and Paramount Global. The deal, anticipated to close in the first half of 2025, is not contingent on financing.
Shari Redstone, Chair of Paramount Global and NAI, commented, "Since 1987, my father, Sumner Redstone, expanded the enterprise now known as Paramount Global... Given industry dynamics, we seek to bolster Paramount's future while prioritizing content. We believe the Skydance merger will ensure Paramount's continuing success in this evolving landscape."
Holding 77% of Paramount's Class A shares, NAI has approved the transaction, which requires no further stockholder consent.
The Skydance Investor Group—including the Ellison Family and RedBird Capital Partners—will inject over $8 billion into New Paramount and acquire NAI. This investment includes $2.4 billion in cash for NAI, $4.5 billion in a stock/cash arrangement for publicly traded Class A and Class B shares, and $1.5 billion in primary capital for Paramount's balance sheet.
Subsequently, Skydance will merge with Paramount via an all-stock deal valuing Skydance at $4.75 billion. Current Skydance equity holders will receive 317 million Class B Shares valued at $15 each.
Paramount Class A stockholders will receive $23 per share in a cash/stock election, while Class B stockholders will receive $15 per share under a similar election. The merger consideration offers a 48% premium on Class B stock and a 28% premium on Class A stock as of July 1.
Post-closure, Skydance Investor Group will own all New Paramount Class A Shares and 69% of Class B shares, totaling around 70% of the pro forma shares outstanding. Leadership of the merged entity will include David Ellison as Chairman and CEO, and Jeff Shell as President.
Class B stockholders will retain about 30% of New Paramount’s equity, retaining a stake in the company's long-term value creation.
The merger agreement includes a 45-day go-shop period for Paramount's Special Committee, formed in January, to actively solicit alternative acquisition proposals.
Talks between Skydance and NAI commenced last December, with prior reports indicating merger discussions between Paramount and Warner Bros. Discovery Inc., as well as a $26 billion buyout proposal from Sony Pictures Entertainment and Apollo Global Management.
Struggling with losses and significant debt, Paramount reported a first-quarter net loss of $554 million or $0.87 per share in April, a reduction from the previous year despite revenue increases. Paramount+ reached over 71 million subscribers, adding 3.7 million in the quarter. Comparatively, Netflix Inc. gained 9.3 million new subscribers in the first quarter, bringing its total to 269.60 million.
