Paramount has reportedly agreed to terms of a merger with Skydance

Paramount Global (NASDAQ: PARA) is in focus today following a report that it has finally agreed on terms of a merger with Skydance.

What we know about Paramount-Skydance agreement

Skydance and Paramount negotiated for weeks over an agreement that is now awaiting Shari Redstone’s (controlling shareholder of the mass media company) signoff.

Redstone owns National Amusements that currently has a 77% stake in Paramount Global.

The deal will see Skydance purchase about 50% of $PARA’s class B shares for $4.5 billion or $15 each and will leave stockholders with equity in the new entity, as per David Faber of CNBC.

For National Amusements, Shari Redstone will receive some $2.0 billion while RedBird and Skydance will together inject about $1.50 billion into Paramount Global to lower its debt.

Skydance and Redbird will own 2/3^rd of $PARA after the transaction while the remaining of the entertainment firm will rest with its class B shareholders.

Paramount is scheduled for a shareholder meeting on Tuesday. The deal, however, is not subject to their approval, Faber added on Tuesday.

What is the total valuation of Skydance-Paramount deal?

The total valuation of the Skydance-Paramount deal is about $8.0 billion – a significant increase from the media and entertainment firm’s earlier $5.0 billion proposal for $PARA.

Shari Redstone would have received under $2.0 billion for the stake she has in Paramount and the shareholders (class B) would have cashed out at about $11 per share under Skydance’s previous bid.   

Last month, Sony and Apollo Global Management also showed interest in taking over $PARA for a whopping $26 billion. Redstone, however, was not very enthused by the proposal as it included splitting Paramount Global while she wants the company to remain together.

The news arrives more than a month after Bob Bakish resigned as the chief executive of Paramount that is now led by “Office of the CEO” that comprises of George Cheeks (CBS president and CEO), Brian Robbins (head of Paramount Pictures and Nickelodeon) and Chris McCarthy (president and CEO of MTV Entertainment Studios).

$PARA narrowed loss in its latest reported quarter as on the back of a lift from Super Bowl that pushed the numbers of subscribers on its flagship streaming service to 71 million. Paramount stock is currently down well over 10% versus its year-to-date high.