Skydance And Paramount Deal Is Failing

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Over the past several months, mergers and acquisitions departments have been working tirelessly to bind Paramount and Skydance in a merger — in which Skydance provided the combined company with a $3 billion cash infusion that it can use to pay down debt and buy back stock. Paramount was then going to acquire Skydance in an all-stock deal worth toward the upper end of $4.5-$5 billion.

Skydance’s deal also includes a premium package for a percentage of non-voting Class B shares. Paramount’s all stock acquisition of Skydance wouldn’t change, with a value of $5 billion.

As of now, neither of the two offers in play will come to fruition. RedBird Capital Partners is said to have reluctantly concluded that a deal with David Ellison’s Skydance, a longtime partner of Paramount Pictures, ‘will not be going ahead.'

The exclusive negotiating window between the boards of Skydance and Paramount Global to review M&A offers are set to expire at midnight Friday.

Paramount board’s special committee are to review a joint Sony-Apollo offer, totalling a $26 billion all-cash buyout premium, after the May 3 expiration of the Skydance negotiating window. The Sony-Apollo offer appears more attractive to Paramount Global’s Class B shareholders than the Skydance deal. However, if the Sony-Apollo offer does not proceed, the most likely outcome is that Paramount Global will not proceed on either offer, given the threat of investor legal action (if the company were to move forward with Skydance instead).

No definitive decisions have been made about Paramount or Redstone’s next moves.