David Ellison‘s Skydance Media has announced an $8 billion deal to take over Paramount Global, capping a seven-month quest.
The company had received approval earlier Sunday from a special committee of Paramount’s board of directors. The full board then OK’d the plan for a two-step transaction, first the acquisition of National Amusements Inc., the entity run by Shari Redstone that had controlled almost 80% of Paramount voting shares. That transaction will be followed by a full merger.
Paramount Class A stockholders will get $23 per share in cash/stock election. Class B stockholders will get $15 per share in cash/stock election. The cash consideration available to public shareholders totals $4.5 billion.
Ellison will be Chairman and CEO, and former NBCUniversal chief Jeff Shell will lead the company as president.
In a press release, Skydance said it will “reposition Paramount to improve profitability, foster stability and independence for creators, and enable more investment in faster growing digital platforms.”
The all-stock transaction values Skydance at $4.75 billion. Skydance equity holders will receive 317 million Class B Shares valued at $15 per share.
Skydance Investor Group, comprised of the Ellison family and RedBird Capital Partners, will invest $2.4 billion to acquire National Amusements for cash. It will then $4.5 billion for the stock/cash merger consideration to be paid for publicly traded Class A shares and Class B shares, as well as $1.5 billion of primary capital to be added to Paramount’s balance sheet.
After the close of the deal, Skydance Investor Group will own 100% of “New Paramount” Class A shares and 69% of outstanding Class B shares, or about 70% of the pro forma shares outstanding.
The per share cash election amount to be offered to Paramount’s stockholders represents a 48% premium to the price of the Class B stock as of July 1, and a 28% premium to the Class A stock on the same date.
“In 1987, my father, Sumner Redstone, acquired Viacom and began assembling and growing the businesses today known as Paramount Global,” Redstone said. “He had a vision that ‘content was king’ and was always committed to delivering great content for all audiences around the world. That vision has remained at the core of Paramount’s success and our accomplishments are a direct result of the incredibly talented, creative, and dedicated individuals who work at the company. Given the changes in the industry, we want to fortify Paramount for the future while ensuring that content remains king. Our hope is that the Skydance transaction will enable Paramount’s continued success in this rapidly changing environment. As a longtime production partner to Paramount, Skydance knows Paramount well and has a clear strategic vision and the resources to take it to its next stage of growth. We believe in Paramount and we always will.”
Skydance has a 15-year history as a co-finance partners with Paramount on many of its core franchises, including Mission: Impossible, Transformers and Top Gun. The companies pointed to that background in the official announcement and also noted that Skydance’s “exceptional pool of in-house creative animation talent, led by pioneer John Lasseter,” will position the company as a player in animation.
CBS and Paramount Pictures will be reinforced by the transaction, the announcement emphasized.
“This is a defining and transformative time for our industry and the storytellers, content creators and financial stakeholders who are invested in the Paramount legacy and the longevity of the entertainment economy,” Ellison said. “I am incredibly grateful to Shari Redstone and her family who have agreed to entrust us with the opportunity to lead Paramount. We are committed to energizing the business and bolstering Paramount with contemporary technology, new leadership and a creative discipline that aims to enrich generations to come.”
Gerry Cardinale, founder and managing partner of RedBird Capital, described the deal as a “recapitalization of Paramount and combination with Skydance.” The transaction will be “an important moment in the entertainment industry at a time when incumbent media companies are increasingly challenged by technological disintermediation,” he continued. “As one of the iconic media brands and libraries in Hollywood, Paramount has the intellectual property foundation to ensure longevity through this evolution – but it will require a new generation of visionary leadership together with experienced operational management to navigate this next phase. RedBird is making a substantial financial investment in partnership with the Ellison family because we believe that the pro forma company under this leadership team will be the pace car for how these incumbent legacy media businesses will need to be run in the future.”
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