Paramount Global-Skydance Media Merger with Redstone Buyout Nearly Finalized

In a current development reported by sources familiar with the matter to CNBC, Paramount Global and Skydance Media are making headway on an agreement that would merge both media companies while also buying out Shari Redstone’s controlling stake. The special committee in charge of approving or rejecting transactions at Paramount has been collaborating closely with David Ellison’s Skydance Media, backed by private equity firms KKR and RedBird Capital Partners, on the valuation process for Skydance assets as well as determining how much new stock should be issued in connection to a potential recapitalization. According to sources familiar with the matter, both parties are near agreement regarding the value of Skydance at around $5 billion, which would then merge into Paramount Global alongside over four hundred and fifty million dollars that Skydance has obtained via funds from KKR and RedBird Capital Partners for new equity. The buyers intend to get a deal completed in May 2013. While due diligence progression for this process could hinder some initial timescale aspirations, Ellison and both private equity firms plan on raising roughly $4.5 billion -$5 billion worth of fresh capital that would be used partly as compensation to Redstone herself (approximately two hundred million dollars) while also contributing significantly towards debt repayment costs. Skydance’s proposed management line-up has been confirmed by some sources familiar with the matter, revealing Ellison himself taking over leadership duties at Paramount Global, with former NBCUniversal CEO Jeff Shell being appointed as president instead of current incumbent Bob Bakish who would depart from his role upon merger completion. As an aside, private equity giant Apollo and Sony have held exploratory discussions concerning a joint takeover bid for all shareholders in Paramount Global at premium prices; however, the special committee has not received any concrete details regarding this deal that’s outside its agreement to pursue further proceedings solely with Skydance as negotiations develop. An initial proposal put forth by Apollo was ultimately overlooked during exclusivity discussions between Skydance and the committee in favor of more favourable terms from Ellison’s consortium, which offered shareholders future upside potential through a public listing that would carry fewer debt liabilities for Paramount Global itself.