A sense of unease is building around the fate of merger talks between Paramount Global and Skydance Media. On Friday, reports emerged that the two sides will not reach an agreement by the end of the exclusive one-month period set aside by the parties to negotiate a deal.
On Wednesday, a competing $26 billion offer was announced by investors Apollo Global Management with Sony Pictures Entertainment as their studio partner. It appears that no final decision is imminent, with the legacy media giant continuing to operate independently for the time being.
The turn against Skydance occurred despite a last-minute sweetener to appease investors. Skydance CEO David Ellison adjusted its offer to add to the financial return for Paramount investors, but those enticements weren’t enough to secure the approval of Paramount’s board of directors. Ellison described this latest offer as the “last and best” from his company, which may signal an end to negotiations between the sides.
Although the offer from Apollo and Sony addresses certain concerns from Paramount’s board, it comes with its own set of complications. Under the proposed deal, Sony would become Paramount’s majority shareholder and take over control of its operations, with Apollo taking a minority stake.
Paramount’s shareholders would be selling for a premium compared to Skydance’s offer and the studio would wind up in experienced hands under Sony management. However, National Amusements chief Shari Redstone is said to be hesitant to hand over control of Paramount to any private equity firm, including Apollo. Sony’s involvement would also bring regulatory scrutiny from the FTC, which could spell doom for the entire deal.
With both bids having fundamental issues, it may be that Paramount decides to move forward without accepting either.
