Paramount shares soar on new merger offer with Skydance

Getty Images

Paramount Global shares bounced back ahead of the July 4 holiday on a renewed deal between Skydance Media and majority shareholder Shari Redstone to merge Skydance and Paramount.

On Wednesday (July 3), Paramount shares opened up 13% to over $12 per share, their highest level in nearly a month. In early trading, the price stabilized around $11.76-$11.90 per share (up 10%-11%). Last month, shares had fallen after Redstone rejected Skydance’s previous offer on June 11, dropping to all-time lows of less than $10.

The increase comes after Redstone announced Tuesday that a preliminary deal had been reached with David Ellison’s Skydance production company, three weeks after previous talks collapsed. The basic structure of the deal is the same: Skydance would buy National Amusements Inc. and then merge Paramount and Skydance, with nonvoting shareholders entitled to withdraw about half of their shares at $15 a share. The deal is currently under review by the special committee of Paramount Global’s board of directors, which was created to evaluate merger and acquisition offers. (Representatives of the special committee did not respond to requests for comment.)

What’s different about the new deal is that it includes a “go shop” clause, under which Paramount and NAI have 45 days to solicit an offer that meets or exceeds Skydance’s terms. This clause appears to be designed to override approval by Paramount’s non-voting shareholders of the deal and is likely intended to avoid shareholder disputes, giving NAI and the Paramount Global board cover to “reasonably assert that they have considered all options to maximize value to common shareholders.” Variety reported.

The latest offer would reduce Redstone’s payment to NAI to about $1.75 billion, according to a CNBC report; that’s less than the roughly $2.1 billion in Skydance’s most recent offer. In addition, Skydance and its backers, RedBird Capital Partners and KKR, would also contribute $1.5 billion in cash (the same amount as in their previous offer) to help Paramount pay down its nearly $15 billion in debt.

The surge in Paramount’s stock price came after shares rose 5.7% Tuesday following a report that the company was in talks to sell BET for $1.6 billion to a group led by BET CEO Scott Mills. Variety confirmed a CNBC report that Warner Bros. Discovery is in talks with Paramount Global for a sale or partnership between WBD’s Max streaming platform and streamer Paramount+ — a strategy that would likely be pursued if the Skydance deal goes through.

Pictured above: Shari Redstone, David Ellison