DEFM14C: Paramount Global and Skydance Media Announce Merger Agreement, Aim for First Half 2025 Closing

Paramount Global and Skydance Media have entered into a definitive agreement to merge, pending stockholder approval and regulatory conditions, with an expected closing in the first half of 2025.

Summary

• Paramount Global and Skydance Media have agreed to merge, creating a new entity named Paramount Skydance Corporation.
• The transaction involves a series of mergers, including Paramount Merger Sub merging into Paramount, and Skydance Merger Sub merging into Skydance, with New Paramount as the surviving entity.
• Paramount stockholders, excluding Specified Stockholders, can elect to receive either $23.00 cash per Class A share or 1.5333 shares of New Paramount Class B common stock, and $15.00 cash per Class B share or one share of New Paramount Class B common stock.
• A maximum of $4.3 billion in cash consideration will be available for Class B common stock, with elections subject to proration if oversubscribed.
• PIPE Equity Investors will invest up to $6.0 billion in New Paramount Class B common stock at $15.00 per share, with NAI Equity Investors also receiving warrants.
• Post-transaction, the Ellison family, through NAI, will control approximately 77.5% of the New Paramount Class A common stock, granting them significant voting power.
• The Special Committee and Paramount Board have approved the transaction, with the Special Committee declaring it advisable and in the best interests of Paramount and its stockholders.
• The transaction is expected to close in the first half of 2025, subject to regulatory approvals and other customary closing conditions.

Sentiment

Score: 7

Explanation: The sentiment is cautiously optimistic. The merger is presented as a strategic move to enhance competitiveness, but risks and uncertainties are acknowledged.

Positives

• The merger combines Paramount's established media presence with Skydance's content creation capabilities.
• Stockholders have the option to receive cash or stock, providing flexibility.
• The PIPE investment strengthens New Paramount's balance sheet.
• The Special Committee and Paramount Board have deemed the transaction advisable and in the best interests of Paramount and its stockholders.

Negatives

• Class B cash elections are subject to proration, potentially resulting in stockholders receiving less cash than desired.
• The Ellison family will have significant control over New Paramount through their ownership of Class A common stock.
• New Paramount will be exempt from certain corporate governance requirements as a controlled company.
• Former Paramount stockholders receiving New Paramount Class B common stock will not have voting rights.

Risks

• The stock consideration exchange ratios are fixed and will not be adjusted for stock price changes.
• Regulatory approvals may be delayed or not obtained.
• The integration of Paramount and Skydance may be difficult and may not result in the expected synergies.
• The financial assumptions, estimates, projections and synergies considered by the Special Committee and its financial advisor may not be realized.
• Executive officers, directors and affiliates of Paramount and Skydance may have interests in the Transactions that are different from, or in addition to, the rights of the Paramount stockholders and Skydance equityholders, respectively.
• Lawsuits have been filed challenging the Transactions and additional lawsuits may be filed in the future against Paramount, Skydance, NAI, their respective affiliates and/or their respective boards of directors and management and the Special Committee, challenging the Transactions.

Future Outlook

Assuming timely satisfaction or waiver of the conditions to the Closing, the Transactions are expected to close in the first half of 2025.

Management Comments

• On behalf of Paramount, thank you for your continued support, stated George Cheeks, Chris McCarthy and Brian Robbins, Office of the Chief Executive Officer, Paramount Global.

Industry Context

The merger reflects a trend of consolidation in the media industry as companies seek to compete in the streaming landscape and leverage content libraries.

Comparison to Industry Standards

• The document does not provide a direct comparison to industry standards.
• However, it mentions competitors such as CBS, Paramount Pictures, Nickelodeon, MTV, Comedy Central, BET, Paramount+ and Pluto TV.
• It also mentions Skydance has produced or co-financed a total of 36 live-action and animated feature films, 24 of which were co-financed with Paramount, including films for the franchise properties Mission: Impossible, Star Trek and Terminator.
• Skydance also co-produced and co-financed Top Gun: Maverick with Paramount, which grossed $1.5 billion at the worldwide box office in 2022, making it one of the most successful films in Paramount history.

Legal Proceedings

• As of the date of this information statement/prospectus, two lawsuits have been filed challenging the Transactions and additional lawsuits may be filed in the future against Paramount, Skydance, NAI, their respective affiliates and/or their respective boards of directors and management and the Special Committee, challenging the Transactions.

Related Party Transactions

• Certain of the executive officers, directors and affiliates of Paramount and Skydance may have interests in the Transactions that are different from, or in addition to, the interests of Paramount stockholders and Skydance equityholders.
• These interests include, among other things: the potential continued employment of certain executive officers of Paramount and Skydance by New Paramount, the potential appointment of certain directors of Paramount and Skydance by New Paramount, and the rights of Paramount and Skydance executive officers and directors to indemnification by New Paramount and the other surviving entities in the Mergers; and the conversion of outstanding Paramount equity awards into equity awards of New Paramount in the New Paramount Merger, the potential payment of transaction awards in connection with the Closing and enhanced change of control severance benefits on certain qualifying terminations following the Closing.

Stakeholder Impact

• Former holders of Paramount common stock (other than the Specified NAI Stockholders) that have made or are deemed to have made stock elections or whose cash elections are subject to proration will own shares of New Paramount Class B common stock, which are expected to be listed for trading on Nasdaq under the ticker symbol PARA, and will not own shares of New Paramount Class A common stock.
• Holders of New Paramount Class B common stock will not have any voting rights, except as required by applicable law.
• Holders of New Paramount common stock will not have the same protections afforded to stockholders of companies that are subject to all of Nasdaqs rules and corporate governance standards, and the ability of New Paramounts independent directors to influence its business policies and affairs may be reduced.

Next Steps

• Obtain regulatory approvals.
• Mail the information statement/prospectus to Paramount stockholders.
• Satisfy or waive the remaining conditions to closing.
• Close the Transactions in the first half of 2025.

Key Dates

Keywords

Merger, Skydance, Paramount, Stockholders, New Paramount, Transactions, Consideration, Class B Common Stock, Class A Common Stock, PIPE Transaction