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 Paramount Global’s board of directors was expected to meet to vote on a merger proposal, according to a source is familiar with the negotiations.
Redstone, Paramount’s controlling shareholder, was expected to sell her family’s controlling interest 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 failed to reach mutually acceptable terms with Skydance Media for the acquisition of a controlling interest in NAI. It was not elaborated.
The Wall Street Journal, citing people familiar with the matter, first reported Tuesday that the deal had fallen through, and Redstone will now likely pursue a sale of just National Amusements without trying to merge Paramount into another company.
National Amusements owns cinemas in the US, UK and Latin America. It also owns 77% of Paramount’s Class A voting stock, which represents the Redstone family’s controlling interest in the company. Two parties are interested in this stake: independent Hollywood producer Steven Paul and Seagram heir Edgar Bronfman, who is backed by private equity firm Bain Capital.
One source close to Redstone said these other potential buyers have given her options, with the possibility of a lucrative bidding war.
The abrupt end to talks with Skydance came after Ellison and his bidding partners, Redbird Capital and KKR, revalued their bid for National Amusements to provide more money to Paramount’s non-voting shareholders.
Negotiations on other issues continued throughout the weekend, including Redstone’s desire to be shielded from any lawsuits arising from a deal, the source familiar with the negotiations told Reuters. Redstone was disappointed with the deal after Ellison dropped the value of the offer for her Paramount property.
The deal that fell apart would have been the centerpiece of 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 that 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 said in a statement that it met Tuesday to discuss progress on a potential deal. It added that a National Amusements representative informed the committee “that it had no agreement on a deal with Skydance Media and did not anticipate any further steps on this transaction.”
There was no vote on a possible 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)
