Late on Sunday, Skydance Media and Paramount Global (PARA.O) announced their agreement to merge, ushering in a new era for one of Hollywood’s oldest studios.
The firms agreed to a two-step procedure wherein National Amusements, the company that owns the majority share in Paramount Pictures owned by the Redstone family, will be acquired by Skydance and its transaction partners for a cash payment of $2.4 billion.
After that, Skydance and Paramount will merge, giving stockholders $4.5 billion in cash or shares in exchange for an extra $1.5 billion for Paramount’s balance sheet.
Class A voting shares of the owner of the CBS broadcast network increased 4.8%, while Class B, non-voting shares, which had increased more than 3% in trade before to the bell, declined 1.8% at start.
The 41-year-old software entrepreneur David Ellison, who started Skydance, will lead the new Paramount as chairman and CEO. The company’s next president will be former NBCUniversal CEO Jeff Shell.
By this agreement, the “new Paramount” will be positioned as a “tech hybrid, able to transition to meet the demands and needs of the evolving marketplace.” Ellison revealed on Monday to financial experts.
For Shari Redstone, the deal signifies the end of an era. Her father, Sumner Redstone, the late patriarch, built the family’s drive-in movie theater chain into a media empire that included Comedy Central, Nickelodeon, MTV, Paramount Pictures, and the CBS broadcast network.
In a statement, Paramount and National Amusements chair Amy Redstone stated, “Given the changes in the industry, we want to fortify Paramount for the future, while ensuring that content remains king.” Her father popularized the phrase.
Paramount revealed on presentation slides that the transaction will result in $2 billion in run-rate savings, of which half will be realized in the first year, prior to an investor presentation on Monday. The presentations project that restructuring and integration expenses will come to $1.6 billion.
The presentations project that Paramount’s revenue in 2025 will reach $32.6 billion on a pro forma basis, and in 2027, sales would increase by 2% to $33.5 billion.
