After months of speculation and negotiations, Paramount Global and Skydance Media have reached an agreement on a merger deal, CNBC reported. The deal, valued at $8 billion, is a significant increase from earlier offers and is expected to be announced officially in the coming days.

Shari Redstone, the controlling shareholder of Paramount through her company National Amusements, still needs to approve the deal. However, reports suggest she is reviewing the proposal favorably.

This merger comes after a period of uncertainty for Paramount. The company was initially in talks with Warner Bros. Discovery for a potential acquisition, but those talks fell through earlier this year. Paramount also faced a competing offer from Apollo Global Management and Sony Pictures, which valued the company at $26 billion but involved breaking up Paramount’s assets.

Here’s a breakdown of the key details of the Paramount-Skydance merger:

• Financial terms:
  • Redstone will receive $2 billion for National Amusements’ stake in Paramount.
  • Skydance will acquire nearly 50% of Paramount’s class B shares for $15 per share, totaling $4.5 billion.
  • Skydance and RedBird Capital, a private equity firm backing Skydance, will contribute an additional $1.5 billion in cash to Paramount to help with debt reduction.
• Ownership structure:
  • After the merger, Skydance and RedBird Capital will own two-thirds of the combined company.
  • The remaining one-third will be owned by Paramount’s class B shareholders.
• Benefits of the merger:
  • The deal is expected to provide Paramount with much-needed financial stability and resources for growth.
  • Skydance brings experience in film production, potentially bolstering Paramount’s content creation capabilities.
  • The combined company could have a stronger presence in the competitive streaming market with Paramount Plus leveraging Skydance’s content library.
• Key points to note:
  • The merger does not require a vote from Paramount’s shareholders, which was a key point in the negotiations.
  • This development comes amidst a recent leadership shakeup at Paramount, with the company currently run by a triumvirate of executives.
  • Redstone reportedly approves of the new leadership and their strategic plans for Paramount.

The upcoming shareholder meeting on Tuesday will likely focus on the new leadership’s vision for Paramount’s future, independent of the merger announcement. However, the merger is expected to be a major topic of discussion in the coming days as all parties await Redstone’s final approval.