Paramount and Skydance Rekindle Merger Talks


Paramount Global (NASDAQ:PARA) saw its stock price jump by as much as 8% on Wednesday after reports from the Wall Street Journal indicated the media giant is back in merger talks with Skydance Media. The proposed deal outlines Skydance acquiring National Amusements, the holding company controlled by Shari Redstone, for $1.75 billion, followed by a merger with Paramount.

New Agreement Details

Shari Redstone, who holds controlling interest in Paramount through National Amusements, had previously called off merger discussions with Skydance in June after several months of negotiations. The new terms of the deal involve Skydance acquiring National Amusements and subsequently merging with Paramount, which owns prominent media assets including CBS, BET, Showtime, MTV, and its streaming platform.

Furthermore, the revised deal includes a 45-day “go-shop period,” which allows other potential bidders to submit offers, introducing an element of uncertainty to the proceedings.

Analyst Perspectives

“There’s a significant amount of uncertainty,” said Geetha Ranganathan, a senior analyst at Bloomberg Intelligence, during an interview with Yahoo Finance. She highlighted that the details of the new agreement “are not very clear at this point.”

One aspect that appears more certain is the protection for Shari Redstone from potential lawsuits by nonvoting shareholders, a primary reason for the previous deal’s termination. “It seems like this time around, the agreement includes much stronger indemnification language, which could potentially shield her from a substantial portion of the upcoming litigation,” Ranganathan added.

Historical Context and Current Dynamics

Skydance has a history of collaborating with Paramount, having produced successful film franchises like “Mission Impossible,” “Top Gun: Maverick,” and “Transformers.” The initial merger discussions underwent numerous revisions after nonvoting shareholders raised concerns about terms that included a $2 billion cash payment to Redstone as the initial step of the transaction.

The complexity of the negotiations has cast a shadow over the company, resulting in significant changes, including the departure of CEO Bob Bakish in late April. Bakish reportedly clashed with Redstone regarding the Skydance deal. He has since been replaced by an “Office of the CEO” consortium composed of three division heads.

Shareholder Sentiment

Despite the uncertainties, the recent surge in Paramount’s stock price indicates shareholder enthusiasm about the potential for mergers and acquisitions. “Shareholders are excited that M&A is back on the table,” Ranganathan observed.

However, she cautioned, “The longer this process stretches out, the less value the assets will have.”