As media company Paramount, home of the Top Gun series and Nickelodeon, prepares to enter into exclusive negotiations with media company Skydance, another suitor appears.
Investment firm Apollo Global Management told Paramount over the weekend that it was interested in buying the entire company for more than $26 billion, including Paramount's debt, according to two people familiar with the matter. The company had previously submitted an $11 billion offer to buy just Paramount Pictures Studios. (Paramount also owns CBS and other cable networks.)
Paramount has decided not to accept Apollo's offer, according to people familiar with the matter, with one person explaining that doing so could derail negotiations with Skydance, which signed an exclusive deal this week.
Apollo's bid will require due diligence, which will take time, one of the people said. In a letter to Paramount, Apollo said it was interested in acquiring all of the company's shareholders for cash, seeking a deal that would satisfy Paramount's controlling shareholder Shari Redstone as well as the company's common stockholders. He said this could be attractive as the board is trying to conclude. .
The Wall Street Journal earlier reported on Apollo's interest in Paramount.
The agreement currently being discussed with Skydance would involve Skydance acquiring National Amusement, which owns Mr. Redstone's shares in Paramount, and merging it with Paramount. Mr. Redstone is eager to reach a deal, but it is subject to approval by Paramount's board of directors. The board has been considering its options for several weeks with the help of advisors.
Late last month, David Ellison, the tech magnate who founded Skydance, met with Paramount's board to discuss his vision for the deal, according to two people familiar with the talks. Paramount stock has fallen 18% since the beginning of the year amid headwinds in the media industry. Its market value is approximately $9.4 billion, and its long-term debt balance is approximately $15 billion.
The company trades at a deep discount to the combined value of Viacom and CBS, which merged in 2019 to form Paramount. Paramount+ is still in the red, but the deficit is narrowing and the number of subscribers continues to increase.
Ratings agency S&P Global last week downgraded Paramount's debt to junk bond status, citing “accelerated decline” in its traditional TV business and continued uncertainty in its streaming push. Some analysts believe a downgrade could make it easier to buy Paramount by potentially avoiding a clause that requires buyers to pay the company's debt immediately.