(Bloomberg) — Shares of Paramount Global rose the most in two months on Wednesday after it revived a merger deal with independent film and TV producer Skydance Media.
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Skydance, led by Oracle Corp. co-founder Larry Ellison’s son David Ellison, has reached a preliminary agreement to buy National Amusements Inc. of Shari Redstone and to join Paramount, the parent of CBS and MTV, according to a person with knowledge of the matter. .
National Amusements, the family company that controls Paramount, will refer the deal to a special committee of Paramount directors for review, said the person, who asked not to be identified discussing a deal that has not been announced.
Paramount shares rose as much as 13% to $12.13 after trading opened in New York on Wednesday. They were up 8.9% at 10:39 am
The deal follows the collapse last month of talks between Skydance and National Amusements. The two got back together last week, with discussions escalating Tuesday, the person said.
The new terms include a higher valuation for National Amusements and stronger language indemnifying the Redstones’ company against litigation that could result from the deal, the person said. Sellers have 45 days to seek better offers, another person familiar with the matter said.
Paramount and Skydance declined to comment. National Amusements did not respond to questions. The Wall Street Journal reported on the deal earlier Tuesday, saying terms of the deal were not known.
A deal could be announced within days, the person said, though it’s still possible the deal could fall apart.
“The Paramount/Skydance deal has been discussed on and off for about 7 months and the fact that this is still the only serious deal on the table today speaks volumes about Paramount’s strategic choices,” Kannan Venkateshwar, an analyst at Barclays. Capital, writes in a note to investors.
As part of the transaction Ellison previously proposed, he and his partners, including RedBird Capital Partners and KKR & Co., offered to buy National Amusements for $2.25 billion and inject $1.5 billion into Paramount’s balance sheet to pay down debt . The film and television company’s long-term borrowings exceed $14 billion.
The Ellison Group would have contributed $4.5 billion in additional funds to buy Paramount shares. Up to 50% of Paramount’s non-voting Class B shareholders would receive $15 a share and all non-Redstone family Class A shareholders would receive $23 a share, people familiar with the discussions said at the time. .
Bonds and credit insurance related to Paramount also rose on news of the tentative deal. The cost of insuring Paramount against default fell the most in eight months, while its 4.2% notes due 2032 squeezed 45 basis points to 238 basis points above the benchmark.
The investments represented a significant potential lifeline for Paramount, which has struggled to compete as consumers abandon theaters and cable TV in favor of streaming.
The company had a net loss of $554 million, or 87 cents per share, in the first quarter.
Earlier Tuesday, Bloomberg News reported that Paramount is in exclusive talks to sell its Black Entertainment Television network to buyers that include BET chief executive Scott Mills and Chinh Chu, who runs New York-based private equity firm CC Capital.
The group has discussed an offer of $1.6 billion to $1.7 billion, according to people familiar with the matter, who asked not to be named, citing non-public information.
–With assistance from Hannah Miller, Thomas Buckley and Michael Tobin.
(Updates with bond trading in paragraph 12.)
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