Skydance enhances Paramount offer with $3 billion cash injection

Skydance and Shari Redstone’s holding company are making a bold move with a $3 billion investment offer in Paramount, aiming to push forward a complex merger that has caused turmoil within the Hollywood group. The offer, which includes $2 billion in cash to common shareholders, comes as Paramount’s chief executive, Bob Bakish, resigns, leaving the future of the company uncertain.

Redstone, chair of Paramount’s board, and the board have been working on a merger deal with David Ellison’s Skydance, backed by his billionaire father Larry Ellison, as well as RedBird Capital and KKR. Under the latest terms, Skydance would buy Redstone’s National Amusements for less than $2 billion and then merge with Paramount in an all-stock deal, valuing Ellison’s company at about $5 billion.

The Ellison-led consortium would also invest an additional $3 billion in the combined company, with two-thirds of the investment going to cash payouts for common shareholders and the rest to reduce Paramount’s debt. Shareholders will have the option to sell their shares in Paramount or keep stock in the combined company.

The move comes as private equity group Apollo, in partnership with Sony, prepares to bid on Paramount, following a rejected $26 billion all-cash offer. With Paramount reporting a net loss of $554 million in the first quarter, the company is facing challenges in a competitive industry dominated by streaming giants like Netflix.

Analysts are closely watching the developments, with Paolo Pescatore from PP Insights describing the situation as a “car crash with clear divisions among key stakeholders.” The future of Paramount hangs in the balance as the board evaluates the competing offers and the company’s next steps.