Basic CNBC's David Faber reported Monday that Skydance and Skydance have agreed to terms for a merger. He added that the deal could be announced in the coming days.
A special committee of Paramount and the buying consortium – David Ellison's Skydance, backed by private equity firms RedBird Capital and KKR – have agreed to the terms. The deal awaits the signature of Paramount's controlling shareholder, Shari Redstone, who owns National Amusements, which owns 77% of Paramount's Class A shares, Faber said Monday.
The terms of the agreement come after weeks of discussions and a recent competitive bid from Apollo Global Management and Sony Pictures.
“We received the financial terms of the proposed Paramount/Skydance transaction over the weekend and are reviewing them,” a National Amusements spokesperson said.
The agreement currently calls for Redstone to receive $2 billion for National Amusements, Faber reported Monday. Skydance will buy approximately 50% of Paramount's Class B shares at $15 per share, or $4.5 billion, leaving the owners with equity in the new company.
Skydance and RedBird will also contribute $1.5 billion in cash to Paramount's balance sheet to help reduce debt.
After the deal closes, Skydance and RedBird will own two-thirds of Paramount, and Class B shareholders will own the remaining third of the company, Faber said. The Wall Street Journal had previously published the negotiated terms.
Faber reported that the deal would not require a shareholder vote, which was part of the negotiations. Paramount's annual shareholders meeting will be held on Tuesday.
The value of the deal is $8 billion, which is an increase from the $5 billion offer that was on the table earlier. Under those earlier terms, Redstone would have received less than $2 billion for its stake, and Class B shareholders would have been bought out at a roughly 30% premium at $11 a share, CNBC previously reported.
No deal is expected to be announced before the meeting, according to people familiar with the matter, who requested anonymity because the discussions are private. In addition to the ups and downs in negotiations with buyers, Paramount's executive management has also undergone changes in recent months.
Bob Bakish resigned as CEO in late April and was replaced by what the company calls the “Office of the CEO.” Paramount is now led by three executives: George Cheeks, president and CEO of CBS; Chris McCarthy, President and CEO, Showtime/MTV Entertainment Studios and Paramount Media Networks; and Brian Robbins, president of Paramount Pictures and Nickelodeon.
They plan to present strategic priorities at the annual meeting on Tuesday. Later Tuesday, there will be a previously scheduled board meeting, which the interim leaders will once again attend, the people said. Redstone approved of the trio's ideas and leadership during his short tenure, one of the people said.
In early May, Apollo and Sony formally expressed interest in acquiring Paramount for about $26 billion, CNBC previously reported. However, Redstone favored a deal that would keep Paramount together, and Apollo and Sony plan to break up the company, CNBC previously reported.
