Shari Redstone ends negotiations with Skydance Media on a deal to control Paramount

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Shari Redstone has ended negotiations with Skydance Media over a deal that would have handed control of her family’s Paramount entertainment empire to billionaire David Ellison.

The decision closes months of negotiations with Skydance and leaves the company’s future in doubt. Supreme hangs in balance.

Skydance offered about $2 billion to buy Redstone’s National Amusements (NAI), and then planned to merge Paramount into Ellison’s company through a stock deal.

Skydance has offered to buy out about half of Paramount’s common shareholders for $15 a share, while injecting about $1.5 billion to help pay down the company’s debt.

NAI said Tuesday that the groups “were unable to reach mutually acceptable terms” and that they were “grateful to Skydance for their months of work pursuing this potential transaction.”

Skydance representatives declined to comment. Paramount shares closed down 8% at $11.04 following the news, which was first reported by The Wall Street Journal.

Redstone’s decision was a shock to Ellison’s camp, including private equity backers RedBird and KKR, as the two sides appeared to be close to reaching a deal in recent weeks.

Paramount’s special committee, charged with representing the interests of all shareholders of the media company, including those with non-voting rights, supported the bid In a non-binding endorsement earlier this month, the people said they were briefed on the matter.

Red stones A person briefed on the matter said she changed her mind in recent days, in part because Skydance reduced the amount of cash it would have transferred to parent company NAI when it increased its payments to other shareholders.

Those following the negotiations said they were stunned by her decision to withdraw. Ellison has agreed to “virtually” everything NAI and Paramount have asked for during months of negotiations, the people added.

The board’s special committee met Tuesday to discuss the Skydance proposal, only to be told by NAI representatives that there was no deal. The person added that there was no expectation of “a path forward for this transaction,” according to a statement from directors on the committee.

Redstone is currently considering potential offers from other suitors.

Billionaire Edgar Bronfman Jr, heir to the Seagram beverage corporation, was signaled his interest in acquiring NAI for more than $2 billion, according to two people familiar with the matter. His bid is backed by private equity group Bain. But that group will need weeks to complete its due diligence before making a formal offer, the people warned.

Redstone has also received interest from film producer Steven Paul, one person said.

However, one panelist said there is currently no real alternative to Skydance.

NAI controls about 80% of Paramount’s voting rights despite owning only about 10% of the company’s shares. Whoever buys NAI could technically control Paramount without having to buy the entire company, although non-voting shareholders could challenge such a move in court.