Sony and Apollo sent a letter expressing interest in Paramount

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Sony Pictures and private equity firm Apollo Global Management have sent a letter to the Paramount Global board expressing interest in acquiring the company for about $26 billion, according to people familiar with the matter.
Spokespeople for Paramount, Redstone’s National Amusements, the special committee and Skydance declined to comment.
Paramount Global shares jumped more than 12% on the news that Sony and Apollo submitted a letter formalizing its interest, earlier reported by The New York Times and The Wall Street Journal.
Redstone initially rejected an offer by Apollo in favor of exclusive talks with Skydance.
That could also assuage Redstone’s fears that a new buyer could break apart the company, because Sony is another large Hollywood player and the owner of Sony Pictures.
A $26 billion offer for Paramount Global values the company higher than the company’s current $22 billion enterprise value.
Still, the special committee would likely want to review details on financing and get assurances that there are no regulatory challenges in merging with Sony, a non-U.S. entity.
Redstone could also argue she’s more comfortable with pushing forward at Paramount Global without a sale.

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As per those acquainted with the situation, Sony Pictures and Apollo Global Management, a private equity firm, have written to the board of Paramount Global, indicating their interest in purchasing the company for approximately $26 billion.

The formal expression of interest is made while Skydance Media, led by David Ellison and supported by RedBird Capital and KKR, waits to hear from Paramount’s special committee regarding whether or not the panel will recommend Skydance’s bid to acquire the company to controlling shareholder Shari Redstone.

According to people familiar with the situation, Skydance Media has not received a response from the special committee yet but anticipates learning about its recommendations for the committee’s next steps as soon as this coming Thursday. The Skydance consortium could receive a recommendation from Paramount’s panel to accept or reject Skydance’s offer, or it could return with modifications or suggestions.

No comments were offered by representatives of Skydance, Redstone’s National Amusements, Paramount, and the special committee. Requests for comment from Sony and Apollo were not immediately answered.

The parties may extend the exclusivity window that expires on Friday if the special committee wishes to carry on negotiating with Skydance or if Redstone needs more time to think through her options while still speaking with Ellison’s company. Skydance has been negotiating the deal for months, so it’s also possible that it will back out.

Redstone could focus on negotiating a deal with Sony and Apollo, which would give all common shareholders a premium payout on their shares, if Skydance decides to leave.

The New York Times and The Wall Street Journal had earlier reported that Sony and Apollo had sent a formal letter expressing their interest, which caused Paramount Global shares to jump more than 12 percent.

When Apollo first made an offer, Redstone turned it down in favor of speaking exclusively with Skydance. A person familiar with the situation stated that Redstone still favors an agreement that would keep Paramount together, like Skydance’s offer would. With a series of divestitures aimed at extracting value, a private equity firm would probably dismantle the business.

According to someone familiar with the letter, the Sony-Apollo offer would make the former the majority shareholder and the latter a minority holder. Given that Sony is a major player in Hollywood and the owner of Sony Pictures, this may also allay Redstone’s concerns that a new buyer would destroy the business.

An offer of $26 billion for Paramount Global places a higher value on the business than its present enterprise value of $22 billion.

Nevertheless, the special committee would probably want to scrutinize the financing details and obtain guarantees that the combination with the non-U.S. Sony would not present any regulatory obstacles. S. a thing. As per the people acquainted with the situation, the special committee would have to notify the Skydance consortium that it wishes to terminate the exclusive negotiations in order to accomplish this, which would probably cause Skydance to withdraw from the bidding process.

Many Class B shareholders would be pleased with that move, including Gamco, Matrix Asset Advisors, and Aspen Sky Trust, all of whom have openly voiced their disapproval of the Skydance deal. When Skydance made its “best and final” offer, it offered to pay Redstone almost $2 billion for her controlling stake, combine its entertainment assets with Paramount, and raise $3 billion to buy out common shareholders at a premium of roughly 30% on an unaffected $11 per share.

Redstone could counter that she feels more at ease moving forward at Paramount Global in the absence of a sale. Bob Bakish was fired as CEO of the company earlier this week by the board. To appease a restless base of common shareholders, who would probably contend that the Apollo-Sony bid, if genuine, is in the best interests of shareholders, appointing a new CEO and providing investors with a new plan forward would be crucial.

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