Paramount Shares Climb Over 13% as Sony, Apollo Make $26 Billion Offer

The non-binding expression of interest comes as exclusive discussions with David Ellison’s Skydance Media are set to expire on Friday

paramount-sony-apollo-bid
Sony, Apollo and Paramount logos

Shares of Paramount Global surged over 13% during Thursday’s trading session after Sony Pictures Entertainment and Apollo Global Management expressed interest in buying the media conglomerate.

The joint $26 billion all-cash offer, which was sent in a letter signed by Sony Pictures CEO Tony Vinciquerra and Apollo private equity partner Aaron Sobel, is a starting point and non-binding, an individual familiar with the matter told TheWrap. Under the new terms, Sony would be the significant majority shareholder with operational control, while Apollo would take a minority stake.

Apollo previously submitted a $26 billion all-cash offer on its own, which included $12 billion plus the assumption of debt, though that was reportedly rebuffed by Paramount due to concerns around financing.

Paramount and Sony declined to comment. Representatives for Apollo did not immediately return TheWrap’s request for comment. The Wall Street Journal was the first to report this story.

The move comes as exclusive discussions between Paramount and Skydance Media’s David Ellison are set to expire on Friday. It’s unclear if that exclusivity window will be extended.

The two-step deal would see Skydance acquire the company through controlling shareholder Redstone’s stake in National Amusements, which owns 77% of Paramount voting stock. The second step would see Skydance and Paramount merge to create a combined company valued at around $5 billion.

Under a newly revised offer, Skydance would include a $3 billion cash injection as well as premium sweetener for a percentage of non-voting Class B shares in an effort to assuage minority shareholders’ concerns, an individual familiar with the negotiations told TheWrap. Redstone, who is already set to get a premium for her shares, could take less cash and keep more equity in Paramount under one scenario being discussed. She is also open to giving non-voting, minority shareholders a say in whether any transaction gets approved.

Skydance’s revised offer comes after multiple Paramount shareholders — including Matrix Asset Advisors, Ariel InvestmentsAspen Sky Trust and Blackwood Capital Management — have expressed opposition to the Skydance deal, arguing it prioritizes controlling shareholder Shari Redstone’s interests over the rest of Paramount’s non-voting, minority stockholders and would dilute the value of their holdings.

Ariel’s founder and chairman John Rogers Jr., whose firm had a 1.8% stake in Paramount as of the end of 2023, and GAMCO Investors Inc. chairman and CEO Mario Gabelli, whose funds own 5 million voting shares, have also both previously warned that they could pursue litigation if the Skydance deal or any other bid does not appropriately benefit their clients.

In addition, The Employees’ Retirement System of Rhode Island is seeking a court order from Delaware’s Court of Chancery to compel Paramount’s board and management to turn over all documents and communications related to its merger talks with Skydance. The pension fund is concerned that Redstone and National Amusements, which owns 77% of Paramount’s voting stock, have “usurped Paramount’s corporate opportunities” and are interfering with the board’s ability to find the best deal for shareholders.

Paramount, which has a market capitalization of $9.6 billion, closed at $13.86 per share on Wednesday, slightly above its 52-week low of $10.12 apiece hit last month. Shares have fallen 39% in the past year.

Sony, which has a market capitalization of $103.7 billion, saw its shares rise as much as 2% on Thursday. The stock, which closed at $84.08 per share, is down 9% year-to-date and in the past year.

Apollo, which has a market capitalization of $67.2 billion and saw its shares climb 4%, closed at $112.07 per share and is up 31.8% in the past six months, 22.7% year-to-date and 83.9% in the past year.

Comments

Leave a Reply

Your email address will not be published. Required fields are marked *

This site uses Akismet to reduce spam. Learn how your comment data is processed.