(Reuters) – A deal between Paramount Global and Skydance Media could see the media conglomerate acquire an independent studio.
in a stock deal valued at about $5 billion, the Wall Street Journal reported Friday.
Under the terms negotiated, National Amusements, which controls Paramount, will receive more than $2 billion in cash in the first phase of the deal, the report said.
Skydance could also provide a significant cash injection to Paramount, owner of Paramount Pictures, to strengthen its balance sheet and help pay down debt, the Journal reported, citing people familiar with the matter.
Paramount and Skydance did not respond to Reuters’ request for comment on the WSJ report after business hours. National Amusements and its controlling shareholder Shari Redstone could not immediately be reached.
Paramount board members have agreed to enter into exclusive merger talks with Skydance Media, favoring an independent studio over a $26 billion offer from private equity firm Apollo Global Management (NYSE:), Reuters reported on Wednesday.
As a result of the two companies merging, the combined company will have much more flexibility in what it can do with those franchises, the WSJ reports, adding that Redstone will receive cash, while investors with non-voting shares will receive shares of the combined company.
Negotiations for the deal are more advanced than Apollo’s proposal and, if successful, would end Shari Redstone’s control of the media empire built by her father, the late Sumner Redstone. The agreement gives Skydance 30 days of exclusive negotiations with Paramount.
Skydance is led by David Ellison, son of Oracle (NYSE:) co-founder Larry Ellison, and is seeking to buy National Amusements, which directly and indirectly owns about 77% of Paramount’s voting shares.
This sale is contingent on Ellison’s ability to merge Skydance and Paramount Global.