Sony and Apollo await response to Paramount's $26 billion offer By Reuters

By Dawn Chmielewski

(Reuters) – Sony Pictures Entertainment and private equity firm Apollo Global Management (NYSE submitted a $26 billion offer for Paramount Global on Wednesday, but have yet to receive a response as of Friday, according to a person familiar with the matter. The issue.

A special committee of Paramount's board of directors, created to evaluate bids for the company, has been holding exclusive talks with Skydance Media. That exclusivity period ends Friday, and another source familiar with the matter said it is unlikely to be extended, opening the doors to other bidders.

The companies submitted a non-binding offer letter on Wednesday, signed by sony (NYSE:) Pictures CEO Tony Vinciquerra and Apollo partner Aaron Sobel confirmed a source to Reuters. The $26 billion offer is a combination of cash and debt assumption.

Sony would have a majority stake in the company, a source previously told Reuters, and would operate Paramount, whose film library spans “Star Trek,” “Mission: Impossible” and “The Godfather,” along with TV characters such as SpongeBob SquarePants. Apollo would be a minority shareholder.

Sony and Apollo's last-minute expression of interest may well force Paramount's board to evaluate other offers, especially after some shareholders expressed concern about the deal with David Ellison's Skydance and have urged Paramount to consider others. offers, including that of Apollo.

Apollo declined to comment to Reuters, which reported in April that Sony's SPE and Apollo were in talks about a joint bid. Paramount and Sony also declined to comment on the Apollo-Sony deal, which was first reported by the Wall Street Journal.

Skydance and a spokesman for Paramount's special committee also declined to comment.

The rival bid comes at a tumultuous time for Paramount.

Shari Redstone's media empire replaced CEO Bob Bakish with a trio of executives on Monday, while four independent members of Paramount's board of directors will resign at the company's annual shareholder meeting on June 4.

Bakish was once seen as Redstone's loyal lieutenant. However, their relationship began to deteriorate in May 2023, when he urged Redstone to support a cut to the company's stock dividend, saying it would help lift Paramount's sagging stock, a prediction that never came true, according to two sources near Redstone.

THE STRUGGLES OF PARAMOUNT

Paramount has been struggling to recover from months-long strikes last year by Hollywood writers and actors, a weak advertising market and U.S. cable cuts that have eroded profits from its television business.

Its streaming service also lags far behind rivals such as Netflix (NASDAQ:) and Disney+ in subscriber numbers, even though Redstone hoped the 2019 merger of CBS and Viacom would help the combined company, later renamed Paramount. Global, to compete better.

Paramount shares have fallen more than 65% since then, losing more than $14 billion in market value.

At Wednesday's closing price of $12.26, the company was valued at $7.67 billion, according to LSEG data. It has more than 14 billion dollars of debt.

The potential acquisition would help SPE increase its share of the North American box office. Sony Pictures earned $1.01 billion in box office revenue in the United States and Canada last year, compared to Paramount's $842.4 million, according to Comscore data.

SPE, a unit of Tokyo-based Sony Group, says its operations encompass the production, acquisition and distribution of film and television, the creation and distribution of digital content, the operation of studio facilities and the development of new products, services and entertainment technologies.

The group has more than 3,500 titles from notable films and franchises such as “Jumanji”, “Resident Evil” and James Bond.

This is not the first time that Sony has bet on Paramount. Vinciquerra had previously approached Paramount majority shareholder Shari Redstone to explore the possibility of acquiring the Paramount Pictures film studio, according to two people familiar with the matter. At the time, Redstone was not interested in breaking up the company, according to one of the sources.

The latest proposal would mark the beginning of a process that would involve due diligence. There are also potential regulatory hurdles for Sony Pictures, a division of the Tokyo-based Sony Group, which owns Paramount's CBS streaming network.

Sony's U.S. partner Apollo acquired Cox Media Group's television stations in a 2019 deal that required approval from the Federal Communications Commission.