Exclusive negotiations between Paramount Global and Skydance Media are unlikely to result in an agreement, according to reports.
Paramount, home of Paramount Pictures, MTV and CBS, has entered into exclusive 30-day negotiations with Skydance, the company behind Paramount’s blockbuster hits including “Mission: Impossible” and “Top Gun: Maverick.” .
CNBC’s David Faber said Wednesday that the two companies are unlikely to reach a deal before the exclusivity period ends on May 3.
“There won’t be a deal done by then,” Faber told Business Network. “I don’t think the market expected that to happen. It’s going to take a lot longer than that, and there may be more twists and turns from here.”
Faber said Skydance, led by CEO David Ellison, son of Oracle co-founder Larry Ellison, could save up to $3 billion in costs by combining with Paramount. He added that he was thinking about it.
Paramount declined to comment. Skydance did not immediately respond to a request for comment.
Paramount stock closed at $10.81 on Wednesday, up 3.6%.
Controlling shareholder Shari Redstone’s decision includes only selling her stake in Paramount’s parent company, National Amusements, a privately held company that owns nearly 80% of Paramount Global’s voting stock, for about $2 billion. He has been criticized for negotiating deals.
Such a deal would not give a premium to shareholders who own voting stock, which would disappoint Paramount investors. Shareholders have opposed the deal in recent days.
Last week, the Post reported that Wall Street titan Mario Gabelli, the company’s second-largest voting shareholder after Redstone through super voting stock and Paramount common stock, said he would “prefer not to be sold.” Reported.
“I strongly believe that [Paramount Global CEO Bob] Bakish is doing it, I think he can do it, and the value of the stock will go up significantly,” Gabelli said of the executive’s turnaround strategy.
“The idea that National Amusements is getting a premium for its voting stock is completely legitimate,” Gabelli said. Los Angeles Times last week. “The question is the amount. My clients want to be treated like voting stock. All voting stock should be treated equally.”
Gabelli also opposed a $26 billion offer by private equity firm Apollo Global Management.
But other shareholders implored Redstone to consider the deal.
Matrix Asset Advisors said a potential Skydance deal would be “detrimental” and said Paramount’s board was not seriously considering Apollo’s offer given concerns about deal funding. “It’s particularly upsetting,” he said.
Like Gabelli, Matrix and others are concerned about dilution in a deal that rewards Redstone at the expense of Class B shareholders.
“In some ways, I would expect that the special committee would look at some form of compensation for Company B shareholders,” Faber told CNBC. “I don’t know how it’s going to go, but I’m sure there’s an expectation that this thing will take another turn before they decide whether they can finally get there.”
