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Sony and Apollo Express Interest in $26B Paramount Buyout Amid Skydance Merger Talks
May 3, 2024
According to sources familiar with the matter, Sony Pictures and private equity firm Apollo Global Management have sent a formal letter to the Paramount Global board showing their interest in buying the company for around $26 billion.
This official expression of interest by the two companies follows David Ellison’s Skydance Media, supported by private equity firms RedBird Capital and KKR, as they await feedback from Paramount’s special committee regarding the committee’s recommendation on whether to endorse its bid for acquiring the company to controlling shareholder Shari Redstone.
Even though Skydance Media has not received any updates from the special committee, insiders suggest that they may receive the committee’s recommendations on potential upcoming steps soon. Paramount’s panel might advise either approving or rejecting Skydance’s offer, or they could propose alternative solutions or adjustments to the Skydance consortium.
No parties have commented yet.
Should the special committee wish to prolong talks with Skydance, or if Redstone requires additional time to think through matters while maintaining discussions with Ellison’s company, they may opt to extend the exclusivity window, which is currently set to expire Friday, May 3. On the contrary, Skydance may decide to withdraw from the deal after months of negotiations.
If they choose to walk away, this could prompt Redstone to pivot toward negotiating a deal with Sony and Apollo, ensuring all common shareholders receive a premium payout on their shares.
Paramount Global’s shares shot up by over 12% after reports from The New York Times and The Wall Street Journal about Sony and Apollo submitting a formal letter expressing interest.
At first, Redstone turned down an offer from Apollo in favor of exclusive talks with Skydance. According to a source familiar with the situation, Redstone continues to give precedence to a deal that would maintain Paramount as a unified entity, similar to what Skydance’s offer proposes. The involvement of a private equity firm would potentially involve breaking up the company through divestitures to maximize value output.
According to a source familiar with the letter, Sony and Apollo’s proposal would position Sony as the majority shareholder and Apollo as a minority investor. This setup might alleviate Redstone’s worries regarding the possibility of a purchaser dismantling the company, given Sony’s prominent position in Hollywood and ownership of Sony Pictures.
A proposed $26 billion bid for Paramount Global marks a steeper valuation than the company’s current enterprise value of $22 billion.
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