By Dawn Chmielewski
LOS ANGELES (Reuters) -Media heiress Shari Redstone has ended talks with David Ellison’s Skydance Media, even as a special committee of the Paramount Global’s board was expected to meet to vote on a merger proposal, according to a source familiar with the negotiations.
Redstone, Paramount’s controlling shareholder, had been expected to sell her family’s controlling stake in Paramount to Ellison as part of a $2.25 billion sale of the family’s holding company, National Amusements.
National Amusements issued a statement saying it had been unable to reach mutually acceptable terms with Skydance Media for the acquisition of a controlling stake in NAI. It did not elaborate.
The Wall Street Journal, citing people familiar with the matter, first reported on Tuesday that the deal had fallen apart, and Redstone will now likely pursue a sale of just National Amusements without trying to merge Paramount into another company.
National Amusements owns movie theaters in the U.S., U.K. and Latin America. It also holds 77% of Paramount’s class A voting stock, representing the Redstone family’s controlling interest in the company. Two parties are interested in this stake: independent Hollywood producer Steven Paul as well as Seagram heir Edgar Bronfman, who is backed by private equity firm Bain Capital.
One source close to Redstone said these other prospective buyers have given her options, with the possibility of a lucrative bidding war.
The abrupt end of talks with Skydance came after Ellison and his bidding partners, Redbird Capital and KKR, revalued its offer for National Amusements to provide more cash for Paramount’s nonvoting shareholders.
Negotiations continued through the weekend on other issues, such as Redstone’s desire to be indemnified from any lawsuits arising from a deal, the source familiar with negotiations told Reuters. Redstone soured on the deal after Ellison dropped the value of the offer for her Paramount holdings.
The deal that fell apart would have been the linchpin to a second transaction, in which Paramount would have acquired Skydance in an all-stock deal.
“NAI is grateful to Skydance for their months of work,” Redstone’s company said in a statement which also expressed confidence in the strategic vision outlined last week by a trio of executives who now lead Paramount.
The special committee of Paramount’s board of directors issued a statement saying it met on Tuesday to discuss progress of a potential deal. It added that a representative of National Amusements informed the committee “that it did not have an agreement on a deal with Skydance Media and didn’t anticipate a path forward on this transaction.”
No vote was taken regarding any potential transaction.
Skydance did not immediately respond to a Reuters request for comment.
(Reporting by Dawn Chmielewski in Los Angeles and Zaheer Kachwala in Bengaluru; Editing by Shounak Dasgupta and David Gregorio)
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