Analysts are offering insights into the merger, while Paramount’s Non-Executive Chairwoman, Shari Redstone, shares her perspective on the future implications of the deal.
After extensive negotiations, Paramount Global and Skydance have reached a merger agreement to combine their media assets. This merger includes a substantial premium for Paramount shareholders: a 48% premium on Class B stock and a 28% premium on Class A stock, based on the July 1, 2024 valuation. Class A shareholders will receive $23 per share, and Class B shareholders will receive $15 per share or one share in the newly formed entity.
Skydance investors are set to receive 317 million newly issued shares in the new entity, New Paramount, valuing Skydance at approximately $4.75 billion.
The Ellison Family and RedBird Capital Partners, leaders of the Skydance Investor Group, are injecting $2.4 billion in cash to acquire National Amusements, $4.5 billion for stock and cash compensation for Paramount’s Class A and Class B shares, and an additional $1.5 billion to bolster Paramount’s balance sheet.
The merger is anticipated to be finalized in the first half of 2025.
Rosenblatt analyst Barton Crockett views the revised merger negotiations between Skydance and Paramount as a significant improvement, likening it to a “better sequel.” Crockett, who upgraded Paramount’s shares from Sell to Buy in March, highlights the new leadership’s promise, extensive industry expertise, and substantial capital investment.
Despite the optimism, Crockett acknowledges the uncertainties posed by ongoing industry challenges, remarking, “It’s not clear yet if the ending will be fully satisfying, given meaningful secular pressures.”
Crockett, who has set a price target of $14 for Paramount’s shares, believes the merger will likely proceed, as National Amusements is expected to approve the deal. He also notes that the required regulatory approval is unlikely to pose significant hurdles.
A critical phase of the merger process is the 45-day “go-shop” period, during which Paramount can explore alternative proposals to ensure the best possible deal for its shareholders.
In summary, the merger between Paramount and Skydance represents a strategic move to strengthen their market positions and leverage combined assets for future growth. As Shari Redstone underscores, in the evolving media landscape, content remains paramount.
