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Sony and private equity group Apollo have told Paramount Global they intend to make a $26bn cash offer for the entertainment company, just one day before an exclusivity window is set to expire for a competing bid from Skydance Media.
The Japanese group behind the rival Sony Pictures studio would be the majority investor in the deal and have control, while Apollo would be a minority equity investor, according to two people briefed on the approach. The pair do not expect to have to refinance Paramount’s roughly $16bn in existing debt.
Their offer would be priced at between $17 and $19.50 per share, the Financial Times previously reported. Paramount’s non-voting class B shares jumped 12.5 per cent to $13.80 after The Wall Street Journal first reported that Sony and Apollo had sent a non-binding expression of interest in bidding for the company.
This is the second approach Apollo has made to Paramount at the same price. While Sony and Apollo are providing all of the equity financing to the bid, Legendary Entertainment, an existing Apollo investment that recently released the blockbuster Dune: Part Two, would also form part of the takeover effort, the people familiar with it said.
Paramount, Sony and Apollo declined to comment.
Shari Redstone, who holds the majority of Paramount’s voting stock, is thought to favour the bid from Skydance, an independent entertainment group run by David Ellison, son of Oracle founder Larry Ellison. Skydance has produced blockbusters including Top Gun: Maverick, which Paramount released.
Skydance has been engaged in exclusive talks with Paramount but that period expires on Friday. It is possible that Paramount could extend the window, however.
Bob Bakish, who was dismissed as Paramount chief executive on Monday, was sceptical of the Skydance offer and had explored other strategic options, according to people familiar with the situation.
Some Paramount shareholders have urged the company to consider Apollo’s overtures, saying its plan is more straightforward and has a higher premium than the Skydance offer. Skydance, along with private equity groups RedBird and KKR, is planning to buy National Amusements, which holds almost 80 per cent of Paramount’s class A voting shares, for $2bn. Under this plan, Paramount would then acquire Skydance for $5bn in a stock deal.
A special committee of the Paramount board is evaluating the Skydance bid. Earlier this week, Skydance made what it called its “best and final” offer, which included a control premium to Paramount’s common shareholders. Holders of Paramount’s non-voting shares have complained that the Skydance bid benefits Redstone but leaves them out.
