Paramount told Skydance it would not extend the Hollywood studio’s exclusive window to negotiate a merger, two people with knowledge of the decisions said Friday, jeopardizing the deal but opening the door to other suitors for the owner from MTV and Nickelodeon.
The development poses a major hurdle for Skydance, a movie studio that has been negotiating a complicated deal to merge with Paramount for months. Many Paramount investors spoke out against the deal, saying it would enrich Shari Redstone, the company’s board chair, at the expense of other shareholders.
The 30-day period for exclusive interviews with a special committee of Paramount’s board of directors expires at the end of Friday. It’s unclear what Skydance, which was founded by tech scion and producer David Ellison, and its backer, RedBird Capital Partners, will do next. The company could wait for Paramount to resume negotiations, make a higher offer, or walk away. The company fears it could be used by Paramount to drive up another bidder’s price.
Paramount’s special committee will likely now focus on negotiations with another suitor, Sony Pictures Entertainment, which has teamed up with private equity giant Apollo Global Management to make a $26 billion bid for the company. Paramount shareholders prefer the all-cash offer — which would include the assumption of Paramount’s debt — because it would give them a substantial premium over the company’s current stock price.
Paramount’s special committee is expected to meet Saturday to discuss the deal, the two people with knowledge of the company’s plans said.
The deal with Sony and Apollo is not without risks. Government regulations restrict foreign ownership of broadcast networks, such as Paramount’s CBS. Sony Pictures Entertainment is a division of the Tokyo-based Sony Group and is unlikely to be able to obtain a license to own CBS. But there are possible solutions to this problem: Apollo could apply to hold the CBS license, or the group could decide to sell the channel.
The fate of Paramount ultimately rests in Ms. Redstone’s hands. Its control over National Amusements, Paramount’s parent company, gives it the power to block any transaction. Ms. Redstone has already signed a potential deal between Skydance and National Amusements that would allow her to sell her stake for about $2 billion, but that deal is contingent on approval of a merger of Paramount and Skydance.
CNBC earlier reported that Paramount plans to end exclusive negotiations with Skydance.
News Source : www.nytimes.com
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