National Amusements has halted talks with Skydance over a proposed merger with Paramount GlobalCNBC's David Faber reported Tuesday.
National Amusements, owned by Shari Redstone, Paramount's majority shareholder, had previously agreed to terms of a merger with a consortium that includes David Ellison's Skydance and private equity firms RedBird Capital and KKR. The deal was awaiting approval from Redstone, CNBC previously reported. national amusements, which controls Redstone, owns 77% of Paramount's class A shares.
Paramount shares closed nearly 8% lower on Tuesday following the report.
National Amusements said in a statement Tuesday that it “has been unable to reach mutually acceptable terms with respect to the potential transaction with Skydance Media for the acquisition of a majority interest in NAI.”
“NAI thanks Skydance for their months of work in pursuing this potential transaction and looks forward to the continued and successful production collaboration between Paramount and Skydance,” the statement said.
Redstone's company said it “supports the recently announced strategic plan being executed by Paramount's Office of the CEO, as well as his and the company's Board of Directors' continued work to continue exploring opportunities to drive value creation for all stakeholders.” Paramount shareholders.
Paramount declined to comment. Spokespeople for Skydance and Redbird did not immediately respond to requests for comment.
The Wall Street Journal previously reported that talks had ended.
“While National Amusements had agreed to the financial terms offered by Skydance, there were other outstanding terms on which they were unable to come to an agreement,” an NAI spokesperson said.
There has been a disconnect over why the discussions did not reach an agreement, according to people familiar with the matter, showing the nature of the process that has dragged on for months with several twists and turns.
The Special Committee of Paramount Global's Board of Directors said: “The Special Committee met on Tuesday to discuss the progress of discussions regarding a possible transaction with Skydance Media. At that time, the Special Committee was briefed by a representative of National Amusements , Inc. . which did not have an agreement with Skydance Media and did not anticipate a path forward in this transaction.
The radical change in the proposed deal not only comes days after Skydance and Paramount agreed to merger terms, but also after Paramount's annual shareholder meeting, where company leaders outlined plans for the future.
Last week, Paramount's current leadership, the so-called “Office of the CEO” (CBS CEO George Cheeks, Paramount Media Networks CEO Chris McCarthy, and Paramount Pictures CEO Brian Robbins), outlined priorities of the company in case it was not sold. .
The shared leadership structure was put in place in late April, when former CEO Bob Bakish resigned.
The trio outlined a plan that included exploring streaming joint venture opportunities with other media companies, eliminating $500 million in costs and divesting non-core assets. The plan presented to shareholders was Redstone's fallback option if it decided not to sell.
While Redstone highlighted the unorthodox structure of the leadership team during the beginning of the shareholder presentation, he expressed his support. He approved of her ideas and leadership during her brief tenure, CNBC previously reported.
Redstone has controlled the future of Paramount and whether a sale would take place.
In May, another potential buyer for Paramount emerged: Apollo Global Management and Sony, which formally expressed interest in acquiring the company for $26 billion, CNBC previously reported. However, Redstone favored a deal that would keep the company together, and Apollo and Sony planned to split up Paramount, separating its movie studio from other parts of the business, including its streaming network, CNBC previously reported.
That's why it was no surprise that Paramount and Skydance agreed to merger terms in early June, CNBC reported.
Under those terms, which were still being worked out as of Tuesday, Redstone would have received $2 billion for National Amusements, CNBC reported. Skydance would buy nearly 50% of Paramount's class B shares for $15 each, or $4.5 billion, leaving holders with shares in the new company. Skydance and RedBird also reportedly contributed $1.5 billion in cash to help reduce Paramount's debt.
The deal with Skydance would have been valued at $8 billion, an increase from the previous offer of $5 billion.
The plan outlined by Paramount's three leaders last week emphasized reducing debt and returning the company to an investment grade rating after it was downgraded to junk status earlier this year. Paramount had approximately $14.6 billion in long-term debt as of March 31.
