Supreme and Skydance have agreed to terms of a merger, CNBC's David Faber reported Monday. An agreement could be announced in the coming days, he said.
A special committee of Paramount and the buying consortium (David Ellison's Skydance, backed by private equity firms RedBird Capital and KKR) agreed to the terms. The deal is awaiting approval from Paramount's majority shareholder Shari Redstone, owner of National Amusements, which owns 77% of Paramount's class A shares, Faber said Monday.
The terms of the deal come after weeks of discussion and a recent competitive bid from Apollo Global Management and Sony Pictures.
“We received the financial terms of the proposed transaction between Paramount and Skydance over the weekend and are reviewing them,” a National Amusements spokesperson said.
The deal currently calls for Redstone to receive $2 billion for National Amusements, Faber reported Monday. 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 would also contribute $1.5 billion in cash to Paramount's balance sheet to help reduce debt.
Upon closing of the deal, Skydance and RedBird would own two-thirds of Paramount, and class B shareholders would own the remaining third of the company, Faber said. The negotiated terms were previously reported by The Wall Street Journal.
The deal will not require a shareholder vote, which was part of the negotiations, Faber said. Paramount's annual shareholder meeting will take place on Tuesday.
The deal is valued at $8 billion, an increase from the $5 billion offer that was previously on the table. Under those previous terms, Redstone would have received less than $2 billion for its stake, and class B shareholders would have been bought out at a nearly 30% premium at $11 per share, CNBC previously reported.
No deal announcement is expected before the meeting, according to people familiar with the matter, who asked not to be identified because the discussions are private. In addition to the twists and turns of negotiations with buyers, Paramount's top management has also undergone a shakeup in recent months.
Bob Bakish resigned as CEO in late April and was replaced by what the company calls the “Office of the CEO.” Paramount is now led by three executives: George Cheeks, chairman and CEO of CBS; Chris McCarthy, president and CEO of Showtime/MTV Entertainment Studios and Paramount Media Networks; and Brian Robbins, head of Paramount Pictures and Nickelodeon.
They plan to present strategic priorities at Tuesday's annual meeting. A previously scheduled board meeting will be held later Tuesday, where interim leaders will once again be present, the people said. Redstone approved of the ideas and leadership of the triumvirate during his brief tenure, one of the people said.
In early May, Apollo and Sony formally expressed interest in acquiring Paramount for about $26 billion, CNBC previously reported. However, Redstone has favored a deal that would keep Paramount together, and Apollo and Sony planned to split the company, CNBC previously reported.
