National Amusements has ceased talks with Skydance over the proposed merger Paramount WorldwideCNBC’s David Faber reported Tuesday.
National Amusements, owned by Paramount controlling shareholder Shari Redstone, had previously agreed to merge with a consortium including David Ellison’s Skydance, private equity firms RedBird Capital and KKR. The deal has been awaiting signature from Redstone, CNBC previously reported. national recreation, Redstone Holdings owns 77% of Paramount’s Class A shares.
Paramount shares closed down nearly 8% on Tuesday following the report.
National Amusements said in a statement Tuesday that it “has been unable to reach mutually acceptable terms for a potential transaction with Skydance Media to acquire a controlling interest in NAI.”
“NAI thanks Skydance for their months of hard work toward realizing this potential deal and looks forward to a continued, successful production partnership between Paramount and Skydance,” the statement read.
Redstone said it “supports the recently announced strategic plan by the Office of Paramount’s Chief Executive Officer and the ongoing work they and the company’s Board of Directors are doing to continue to explore opportunities to create value for all 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 The talks have ended.
“While National Amusements has agreed to the financial terms proposed by Skydance, there are other outstanding terms that have not been agreed upon,” an NAI spokesperson said.
The disagreement over why discussions failed to reach an agreement, according to people familiar with the matter, illustrates the nature of a process that has lasted for months and been fraught with twists and turns.
“The Special Committee met on Tuesday to discuss the progress of discussions regarding a potential transaction with Skydance Media. At that time, representatives of National Entertainment briefed the Special Committee on the situation,” the Special Committee of Paramount Worldwide’s board of directors said. “It did not reach a deal with Skydance Media.” The special committee did not vote on any potential transaction.
The shift in the proposed deal comes not only days after Skydance and Paramount agreed to the terms of the merger, but also after Paramount’s annual shareholder meeting, where company leadership 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 Chief Executive Officer Brian Robbins – lays out the company’s strategic priorities if the company is not sold.
The shared leadership structure was established in late April following the resignation of former CEO Bob Bakish.
The three laid out 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 is Redstone’s alternative if she chooses not to sell.
While Redstone noted the unorthodox structure of the leadership team at the start of her shareholder presentation, she expressed support. She recognized their ideas and leadership during their brief tenures, CNBC previously reported.
Redstone controls Paramount’s future and whether it will be sold.
According to previous reports by CNBC, in May, another potential buyer of Paramount surfaced – Apollo Global Management (Apollo Global Management) and Sony (Sony), officially expressing interest in acquiring the company for $26 billion. However, Redstone favored a deal that would keep the company intact, while Apollo and Sony planned to spin off Paramount, combining its film studio with other parts of the business including the broadcast network, CNBC previously reported separate.
That’s why it’s no surprise that Paramount and Skydance agreed to terms of a merger in early June, according to CNBC .
Under the terms, which were still being finalized as of Tuesday, Redstone will receive $2 billion in funding from National Entertainment, according to CNBC. Skydance will purchase nearly 50% of Paramount’s Class B shares for $15 per share, or $4.5 billion, giving shareholders an equity stake in the new company. Skydance and RedBird will also provide $1.5 billion in cash to help reduce Paramount’s debt.
The deal with Skydance is valued at $8 billion, an increase from the previous offer of $5 billion.
The plan outlined by three Paramount leaders last week emphasized reducing debt and returning the company to an investment-grade rating after being downgraded to junk territory earlier this year. As of March 31, Paramount had approximately $14.6 billion in long-term debt.
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