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Sony-Apollo Drops Paramount’s $26B Offer, But Clears the Way for Continued Deal Talks, NDAs
Sony and Apollo have apparently decided to drop their previous $26 billion all-cash offer to buy Paramount Global, in part due to concerns from Sony shareholders about costs related to Paramount’s streaming assets, The New York reported Times on Friday.
But according to the NYT, Sony and Apollo are still serious about acquiring Paramount assets and are exploring other possible deal structures. As part of this, the companies signed a confidentiality agreement with Paramount that allows them to examine financial information that has not been made public.
Formal negotiations with Sony were approved by a special committee of Paramount’s board of directors on May 5, after the company’s exclusive negotiating window with Skydance Media expired without a deal,
But the committee also signaled interest in further negotiations with Skydance, although the end of the exclusivity window makes a deal less likely. Skydance’s negotiations centered on a potential two-step deal in which it would acquire Paramount through Shari Redstone’s majority stake in National Amusements, which holds 77% of Paramount’s voting shares.
Redstone reportedly wants this deal, but has received strong resistance from Paramount’s minority shareholders who oppose Skydance’s plans to keep all of Paramount’s assets together rather than selling them piecemeal, similar to companies that have been bought and divested by private equity companies – o This last process would generate greater short-term gains for shareholders, although it would also result in a large decrease in Paramount.
Redstone has made public his preference that Paramount not be broken up and has already rejected offers from Sony and Apollo for this reason. According to The New York Times, she privately signaled that breaking up the company is no longer a deal breaker, but would depend on what the terms are.
However, any Sony/Apollo deal could face additional regulatory challenges. It would be necessary to circumvent federal laws that restrict ownership of broadcast television networks by foreign companies. The Biden administration has also favored stronger enforcement of antitrust and labor laws than recent presidential predecessors.
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