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National Amusements Ends Paramount Merger Talks with Skydance

National Amusements Ends Paramount Merger Talks with Skydance

Discussions between National Amusements and Skydance regarding a proposed merger with Paramount Global have come to an end without an agreement. The conclusion of these talks marks the end of months of negotiations.

Shari Redstone, the owner of National Amusements and the controlling shareholder of Paramount, had previously reached economic terms on a merger with a consortium including Skydance, RedBird Capital, and KKR. The deal had been awaiting Redstone’s final approval, according to initial reports by CNBC. National Amusements holds 77% of Paramount’s Class A shares.

Following the report, Paramount shares fell by nearly 8% on Tuesday.

National Amusements released a statement on Tuesday stating that it had “not been able to reach mutually acceptable terms regarding the potential transaction with Skydance Media for the acquisition of a controlling stake in NAI.” The statement expressed gratitude for Skydance’s efforts and looked forward to continuing the successful production collaboration between Paramount and Skydance.

Representatives from Paramount, Skydance, and RedBird have not provided comments.

The Wall Street Journal reported that talks had ended, with National Amusements and Skydance having agreed on financial terms, but other issues remained unresolved, according to a director at NAI. Sources close to the situation revealed that the process had involved various twists and turns over several months.

A significant point of contention was a clause requiring a majority of the minority vote, which the Skydance consortium found unacceptable, according to sources familiar with the matter. The specific approval process intended to ensure the deal’s fairness negated the need for such a vote, based on those familiar with David Ellison’s perspective.

The Skydance consortium attributed the failure of the deal to Redstone’s reluctance to part with a family asset, her demand for more money, and critical comments from Paramount board member Charles Phillips about David Ellison. Phillips declined to comment.

Paramount’s Special Committee of the Board of Directors stated, “The Special Committee met on Tuesday to discuss the progress of discussions regarding a potential transaction with Skydance Media. At that time, the Special Committee was informed by a representative of National Amusements, Inc. that it did not have an agreement on a deal with Skydance Media and didn’t anticipate a path forward on this transaction. The Special Committee did not vote on any potential transaction.”

The collapse of the proposed deal followed shortly after Skydance and Paramount had agreed to merger terms and after Paramount’s annual shareholder meeting, where the company’s leadership outlined future plans.

During the shareholder meeting, Paramount’s leadership, including CBS CEO George Cheeks, Paramount Media Networks CEO Chris McCarthy, and Paramount Pictures CEO Brian Robbins, presented strategic priorities in the event of no sale. Their plan involved exploring streaming joint ventures, cutting $500 million in costs, and divesting non-core assets.

Redstone, who had the final say on whether a sale would occur, expressed support for the current leadership’s strategic plan. She may now consider other offers for National Amusements from external buyers.

In May, Apollo Global Management and Sony expressed interest in acquiring Paramount for $26 billion. However, Redstone preferred a deal that would keep the company intact, whereas Apollo and Sony intended to break up Paramount, separating its movie studio from its broadcast network.

Under the proposed terms with Skydance, Redstone would have received $2 billion in cash for National Amusements, with Skydance purchasing nearly 50% of Class B Paramount shares for $4.5 billion. Skydance and RedBird would have also contributed $1.5 billion to help reduce Paramount’s debt.

The leadership’s plan focused on debt reduction and restoring Paramount’s investment-grade rating, which had been downgraded earlier this year. As of March 31, Paramount had approximately $14.6 billion in long-term debt.