Independent film and tv producer Skydance Media has reached a preliminary agreement to purchase Shari Redstone’s National Amusements Inc. and merge with Paramount Global, the parent company of CBS and MTV, based on an individual accustomed to the matter.
National Amusements, the family-owned company that controls Paramount, will present the deal to a special committee of Paramount directors for review, said the person, who asked to not be identified and spoke of an agreement that has not yet been disclosed.
The agreement followed the collapse Talks between Skydance and National Amusements last month. The two reconciled last week and talks picked up steam Tuesday, the person said.
The recent terms include a better valuation for National Amusements and a stronger provision that indemnifies the Redstones’ company against litigation that would arise from the deal, the person said. The sellers have 45 days to solicit higher offers, one other person accustomed to the matter said.
Paramount and Skydance, which is run by David Ellison, the son of Oracle co-founder Larry Ellison, declined to comment. National Amusements didn’t reply to inquiries. The Wall Street Journal had already reported on the agreement on Tuesday, however the terms of the deal weren’t disclosed.
An agreement might be announced inside a couple of days, the source said. However, there continues to be a possibility that the deal will fall through.
Paramount’s nonvoting shares rose as much as 10% to $11.83 in prolonged trading.
As a part of the deal Ellison had previously proposed, he and his partners, including RedBird Capital Partners and KKR & Co., offered to purchase National Amusements for $2.25 billion and pump $1.5 billion into Paramount’s balance sheet to scale back debt. The film and tv company’s long-term debt totals greater than $14 billion.
The Ellison group would have contributed a further $4.5 billion to the acquisition of Paramount shares. Up to 50 percent of Paramount’s non-voting Class B shareholders would receive $15 per share and all Class A shareholders who will not be members of the Redstone family would receive $23 per share, people accustomed to the discussions said on the time.
The investments represented a key potential lifeline for Paramount, which has struggled with competition as consumers shun movie theaters and cable TV in favor of streaming services.
The company reported a net lack of $554 million, or 87 cents per share, in the primary quarter.
Earlier on Tuesday, Bloomberg News reported that Paramount is in exclusive talks to sell its Black Entertainment Television network, which include BET CEO Scott Mills and Chinh Chu, head of New York-based private equity firm CC Capital.
The group discussed a suggestion of $1.6 billion to $1.7 billion, say people accustomed to the matter who asked to stay anonymous to avoid disclosing public information.
