Paramount and Skydance renew merger talks with sweetened offer

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Paramount has resumed merger talks with independent production studio Skydance Media just weeks after an earlier deal fell apart at the last minute, people briefed about the matter said.

The renewed bid from Skydance included a higher offer to get the deal done, the people said. Shari Redstone, who controls Paramount, abruptly ended negotiations in the first go-around last month.

David Ellison, the head of Skydance and son of Oracle’s billionaire founder Larry Ellison, managed to bring Redstone back to the negotiating table after agreeing to sweeten the deal for the company behind legendary movies such as The Godfather, Titanic and Forrest Gump, the sources added.

Paramount’s special committee, a subcommittee of its board of directors, which had indicated that it was prepared to approve the earlier Skydance deal before it was blocked by Redstone, had been charged with evaluating the new offer, people said.

Redstone controls Paramount via her family’s company National Amusements (NAI), which owns only about 10 per cent of the Hollywood group but holds the vast majority of its voting rights.

There was no certainty a new deal would be reached and Paramount shareholders had a 45 day “go shop” right to seek a higher offer from other potential suitors, the people with knowledge of the matter said.

Barry Diller, the New York media mogul who lost out to Redstone’s father Sumner in the 1990s in a hotly contested bidding war for Paramount, had also been looking into buying a controlling stake in the Hollywood company, the people said.

The New York Times first reported about the renewed talks between Skydance and Paramount as well as the potential interest by Diller.

Skydance was close to reaching a deal last month after it had agreed to offer about $2bn to acquire Redstone’s NAI, and then merge Paramount into Skydance through a stock deal.

As part of that offer, Skydance had also agreed to buy out about half of Paramount’s common shareholders at $15 a share, while also paying about $1.5bn to help cut the company’s debt.

Skydance was given informal approval by the special committee for the deal and was ready to finalise it, but the talks came to an abrupt end when Redstone’s lawyer informed Ellison’s team that they had “not been able to reach mutually acceptable terms”.

Skydance declined to comment. Paramount did not return calls for comment.