Sony and Apollo send letter expressing interest in $26 billion Paramount buyout as company mulls Skydance bid

Sony
Pictures
and
private
equity
firm
Apollo
Global
Management
have
sent
a
letter
to
the


Paramount
Global
board
expressing
interest
in
acquiring
the
company
for
about
$26
billion,
according
to
people
familiar
with
the
matter.

The
expression
of
formal
interest
comes
as
David
Ellison’s
Skydance
Media,
backed
by
private
equity
firms
RedBird
Capital
and
KKR,
awaits
word
from
Paramount’s
special
committee
on
whether
the
panel
will

recommend
its
bid
to
acquire
the
company
to
controlling
shareholder
Shari
Redstone.

Skydance
Media
hasn’t
heard
anything
from
the
special
committee
yet,
though
it
expects
to
find
out
the
special
committee’s
recommendations
on
next
moves
as
early
as
Thursday,
according
to
people
familiar
with
the
matter.
Paramount’s
panel
could
recommend
approving
Skydance’s
offer
or
rejecting
it,
or
it
could
come
back
to
the
Skydance
consortium
with
alternatives
or
changes.

Spokespeople
for
Paramount,
Redstone’s
National
Amusements,
the
special
committee
and
Skydance
declined
to
comment.
Sony
and
Apollo
did
not
immediately
respond
to
requests
for
comment.

If
the
special
committee
wants
to
continue
negotiating
with
Skydance,
or
Redstone
wants
more
time
to
consider
her
options
while
still
talking
to
Ellison’s
company,
the
sides
could
extend
an
exclusivity
window
that
ends
Friday.
It’s
also
possible
Skydance
could
walk
away
from
the
deal,
which
it
has
been
negotiating
on
for
months.

If
Skydance
walks
away,
Redstone
could
turn
her
attention
to
negotiating
a
deal
with
Sony
and
Apollo,
which
would
give
all
common
shareholders
a
premium
payout
on
their
shares.

Paramount
Global
shares
jumped
more
than
12%
on
the
news
that
Sony
and
Apollo
submitted
a
letter
formalizing
its
interest,
earlier
reported
by

The
New
York
Times
and

The
Wall
Street
Journal.

Redstone
initially
rejected
an
offer
by
Apollo
in
favor
of
exclusive
talks
with
Skydance.
Redstone
still
prefers
a
deal
that
would
keep
Paramount
together,
as
Skydance’s
offer
would,
a
person
familiar
with
the
matter
said.
A
private
equity
firm
would
likely
tear
the
company
apart
through
a
series
of
divestitures
to
extract
value.

The
Sony-Apollo
offer
would
make
the
former
the
majority
shareholder
and
the
latter
a
minority
holder,
according
to
a
person
familiar
with
the
letter.
That
could
also
assuage
Redstone’s
fears
that
a
new
buyer
could
break
apart
the
company,
because
Sony
is
another
large
Hollywood
player
and
the
owner
of
Sony
Pictures.

A
$26
billion
offer
for
Paramount
Global
values
the
company
higher
than
the
company’s
current
$22
billion
enterprise
value.

Still,
the
special
committee
would
likely
want
to
review
details
on
financing
and
get
assurances
that
there
are
no
regulatory
challenges
in
merging
with
Sony,
a
non-U.S.
entity.
To
do
this,
the
special
committee
would
have
to
inform
the
Skydance
consortium
that
it
wants
to
end
its
exclusive
talks,
which
would
likely
drive
Skydance
away
as
a
bidder,
according
to
people
familiar
with
the
matter.

That
move
would
be
applauded
by
a
number
of
Class
B
shareholders,
including
Gamco,
Matrix
Asset
Advisors
and
Aspen Sky
Trust,
who
have
all
publicly
expressed
dismay
about
the
Skydance
transaction.
Skydance’s “best
and
final”
offer
included
merging
its
entertainment
assets
with
Paramount,
raising
$3
billion
to
buy
out
common
shareholders
at
about
a
30%
premium
on
an
unaffected
$11
per
share
price,
and
paying
Redstone
nearly
$2
billion
for
her
controlling
stake.

Redstone
could
also
argue
she’s
more
comfortable
with
pushing
forward
at
Paramount
Global
without
a
sale.
Earlier
this
week,

the
board
removed
Bob
Bakish
as
the
company’s
CEO.
Installing
a
new
CEO
and
giving
investors
a
new
plan
forward
would
be
essential
to
assuage
a
restless
common
shareholder
base,
who
would
likely
argue
the
Apollo-Sony
bid,
if
real,
is
in
the
best
interest
of
shareholders.