Paramount Stock Pops on New Skydance Merger Offer

Shares of Paramount Global sprang to life ahead of the July 4 holiday on a renewed agreement between Skydance Media and controlling shareholder Shari Redstone that would merge Skydance and Paramount.

On Wednesday (July 3), Paramount’s stock opened up 13% to over $12/share, its highest levels in nearly a month. In early trading, the price settled down to around $11.76-$11.90/share (up 10%-11%). Last month shares had tumbled after Redstone nixed Skydance’s previous offer on June 11, falling to all-time lows of under $10.

The bump comes after the news Tuesday that Redstone reached a preliminary deal with David Ellison’s Skydance production company — coming three weeks after the previous talks fell apart. The basic structure of the pact is the same: Skydance would buy out National Amusements Inc. and then combine Paramount and Skydance, with nonvoting shareholders entitle to cash out nearly half their shares at $15/share. The deal is now being reviewed by the Paramount Global board’s special committee established to evaluate M&A offers. (Reps for the special committee did not respond to requests for comment.)

Crucially, what’s different in the new agreement: It includes a “go shop” provision, under which Paramount and NAI are understood to have a 45-day window to solicit an offer to match or beat Skydance’s terms. That appears designed to be in lieu of giving Paramount nonvoting shareholders approval over the deal and is likely intended to fend off shareholder litigation, giving NAI and the Paramount Global board cover to “reasonably say they considered all options for maximizing the value paid out to common shareholders,” Variety reported.

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

The lift in Paramount’s stock price came after shares had risen 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. Meanwhile, Variety confirmed a CNBC report that Warner Bros. Discovery is in talks with Paramount Global for a sale or partnership between WBD’s streaming platform Max and the Paramount+ streamer — a strategy that would likely be continued if the Skydance deal goes through.

Pictured above: Shari Redstone, David Ellison