Paramount enters merger agreement with Skydance Media

Skydance Media and Paramount announced that they have entered into a definitive agreement to form “New Paramount”, through a two-step transaction including the acquisition of National Amusements, or NAI, which holds the controlling share stake in Paramount, and subsequently a merger of Skydance and Paramount Global. The management team of New Paramount, led by David Ellison as chairman and CEO and Jeff Shell as president. Under the terms of the agreement, which has been approved by the Paramount board of directors, acting on the unanimous recommendation of the special committee, and by National Amusements, NAI, majority owner of Paramount’s Class A stock, Skydance will merge with Paramount in a transaction valuing New Paramount at an enterprise value of approximately $28B. Existing Skydance investors will receive 317M newly issued Class B shares in New Paramount valuing Skydance at $4.75B based on $15 per Paramount Class B share. Skydance IG, led by the Ellison Family and RedBird Capital Partners, will invest up to $6B to: offer Class A stockholders other than NAI an election to receive in the merger $23 cash per share or 1.5333 shares of Class B stock of New Paramount; offer Class B stockholders other than NAI an election to receive in the merger $15 cash per share or one share of Class B stock of New Paramount, subject to proration if Class B elections exceed $4.3B in the aggregate; use the additional capital to paydown debt and re-capitalize the balance sheet of New Paramount to support strategic initiatives. The merger consideration 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. Also, by continuing to own shares of the new combined company, Paramount Class B stockholders will have the opportunity to participate in the new company’s long-term value creation potential. NAI and its owners have entered into a definitive agreement to sell NAI to Skydance IG for $2.4B on a cash-free, debt-free basis. Following completion of the transaction, only Skydance IG will hold Class A shares. Following the close of the transaction and the growth equity investment and assuming full participation in the cash election by Class B stockholders, Class B stockholders will own approximately 30% of the outstanding equity of New Paramount and Skydance IG will own approximately 70% of the outstanding equity of New Paramount. When the transaction closes, David Ellison will become chairman and CEO. Jeff Shell, chairman of RedBird Sports & Media and former CEO of NBCUniversal, will be president. NAI, which holds approximately 77% of the Paramount Class A shares, has delivered a written consent approving the transaction. No further stockholder approval is required. The consummation of the transaction is not subject to any financing condition. Completion of this transaction is subject to regulatory approvals and other customary closing conditions. The transaction is anticipated to close in the first half of 2025. The definitive transaction agreement includes a 45-day go-shop period during which the special committee of Paramount’s board of directors, with the assistance of its financial advisors, will be permitted to actively solicit and evaluate alternative acquisition proposals. There can be no assurance that this process will result in a superior proposal, and Paramount does not intend to disclose developments with respect to the go-shop process unless and until it determines such disclosure is appropriate or is otherwise required.