Sony Pictures and Apollo’s $26 Billion Offer for Paramount
Sony Pictures, in collaboration with private equity powerhouse Apollo Global Management, has thrown its hat into the ring for the acquisition of Paramount Global. The companies have officially expressed their interest through a letter to the Paramount Global board, proposing a deal valued at approximately $26 billion, sources close to the matter reveal.
This development adds a new layer of complexity to the ongoing saga involving Paramount Global and another suitor, Skydance Media. Skydance, which is supported by RedBird Capital and KKR, is currently in limbo, awaiting feedback from Paramount’s special committee. This committee’s recommendation to Paramount’s controlling shareholder, Shari Redstone, could potentially sway the direction of this corporate tug-of-war. Skydance’s bid has been under discussion for months, yet the special committee’s verdict remains pending, with expectations of a decision possibly by Thursday.
Paramount, along with Redstone’s National Amusements, the special committee, and Skydance, has maintained silence, refraining from commenting on the proceedings. Similarly, attempts to reach Sony and Apollo for insights have so far gone unanswered.
The stakes are high as the special committee deliberates over its next steps. The possibilities include extending negotiations with Skydance, exploring the new offer from Sony and Apollo, or even rejecting all current proposals in favor of an alternative path. The latter could involve Redstone negotiating directly with Sony and Apollo, potentially offering a lucrative premium to all common shareholders of Paramount Global.
News of Sony and Apollo’s official interest sparked a notable surge in Paramount Global shares, climbing more than 12%, signaling investor optimism around the potential deal.
Initially, Redstone had rebuffed Apollo’s advances to enter exclusive discussions with Skydance, showing a preference for an offer that would keep Paramount intact. The concern with private equity firms typically involves the fear of divestitures to maximize value, fragmenting the company in the process. However, the joint bid by Sony-Apollo presents an intriguing scenario where Sony would emerge as the majority shareholder, possibly alleviating concerns about the disintegration of Paramount.
The valuation proposition by Sony and Apollo significantly eclipses Paramount Global’s current enterprise value of $22 billion, making it an offer hard to ignore. Yet, the special committee faces the challenge of scrutinizing the financing details of this offer and assessing any potential regulatory hurdles, particularly given Sony’s status as a non-U.S. entity.
Opting to entertain the Sony-Apollo proposal would necessitate the termination of exclusive discussions with Skydance, potentially alienating the latter as a bidder. This move, however, might be well-received by several Class B shareholders, who have expressed dissatisfaction with the Skydance transaction.
Amid these developments, Paramount Global has also seen internal shifts, notably the ousting of CEO Bob Bakish. The introduction of a new CEO and strategy would be critical in stabilizing the company and appeasing shareholders, especially if the board decides to proceed without a sale.
As the narrative unfolds, all eyes are on Redstone and the special committee’s impending decisions, which could redefine the future of Paramount Global and reshape the landscape of the entertainment industry.
