Sony and Apollo send letter expressing interest in $26 billion Paramount buyout as company mulls Skydance bid

[mwai_chat context=”Let’s have a discussion about this article:nnIn this articlePARAFollow your favorite stocksCREATE FREE ACCOUNTShari Redstone, non-executive chairwoman of Paramount Global, attends the Allen & Co. Media and Technology Conference in Sun Valley, Idaho, July 11, 2023.David A. Grogan | CNBCSony Pictures and private equity firm Apollo Global Management have sent a letter to the Paramount Global board expressing interest in acquiring the company for about $26 billion, according to people familiar with the matter.The expression of formal interest comes as David Ellison’s Skydance Media, backed by private equity firms RedBird Capital and KKR, awaits word from Paramount’s special committee on whether the panel will recommend its bid to acquire the company to controlling shareholder Shari Redstone.Skydance Media hasn’t heard anything from the special committee yet, though it expects to find out the special committee’s recommendations on next moves as early as Thursday, according to people familiar with the matter. Paramount’s panel could recommend approving Skydance’s offer or rejecting it, or it could come back to the Skydance consortium with alternatives or changes.Spokespeople for Paramount, Redstone’s National Amusements, the special committee and Skydance declined to comment. Sony and Apollo did not immediately respond to requests for comment.Paramount’s optionsIf the special committee wants to continue negotiating with Skydance, or Redstone wants more time to consider her options while still talking to Ellison’s company, the sides could extend an exclusivity window that ends Friday. It’s also possible Skydance could walk away from the deal, which it has been negotiating on for months.If Skydance walks away, Redstone could turn her attention to negotiating a deal with Sony and Apollo, which would give all common shareholders a premium payout on their shares.Paramount Global shares jumped more than 12% on the news that Sony and Apollo submitted a letter formalizing its interest, earlier reported by The New York Times and The Wall Street Journal.Redstone initially rejected an offer by Apollo in favor of exclusive talks with Skydance. Redstone still prefers a deal that would keep Paramount together, as Skydance’s offer would, a person familiar with the matter said. A private equity firm would likely tear the company apart through a series of divestitures to extract value.The Sony-Apollo offer would make the former the majority shareholder and the latter a minority holder, according to a person familiar with the letter. That could also assuage Redstone’s fears that a new buyer could break apart the company, because Sony is another large Hollywood player and the owner of Sony Pictures.A $26 billion offer for Paramount Global values the company higher than the company’s current $22 billion enterprise value.Still, the special committee would likely want to review details on financing and get assurances that there are no regulatory challenges in merging with Sony, a non-U.S. entity. To do this, the special committee would have to inform the Skydance consortium that it wants to end its exclusive talks, which would likely drive Skyda …nnDiscussion:nn” ai_name=”RocketNews AI: ” start_sentence=”Can I tell you more about this article?” text_input_placeholder=”Type ‘Yes'”]