Sony & Apollo table $26bn offer for Paramount, shares surge 13%

Yellowstone (Source: SkyShowtime)

Paramount shares have surged more than 10% after Sony Pictures Entertainment and private equity outfit Apollo Global Management tabled a $26bn offer for the embattled US studio.

Sony and Apollo declared their non-binding interest to Paramount on Wednesday, according to the Wall Street Journal, ahead of an exclusivity window with rival bidder Skydance expiring today. That window can be extended, however.

Meanwhile the proposed Sony and Apollo takeover offer, which has been expected, would see the Japanese firm taking on a majority stake while the private equity firm would hold a minority position.

Bob Bakish (Source: MIPCOM)

The Yellowstone and Top Gun studio has already rebuffed a $26bn deal from Apollo, but the latest proposal with Sony will also see Dune producer Legendary Entertainment – part owned by Apollo – being involved.

The development, which saw shares rise 13% in after-hours trading, came after Sony Pictures Entertainment CEO Tony Vinciquerra held conversations with Apollo late last month with a view to making an all-cash offer for Paramount.

Rival Skydance has taken the indirect route of acquiring Shari Redstone’s National Amusements, which controls 77% of Paramount’s voting stock. That deal would leave Paramount Global a public company, handing Redstone a windfall of around $2bn.

Former CEO Bob Bakish, who exited earlier this week, had reportedly argued against the Skydance deal, with that proposed deal also provoking push-back from investors – mainly shareholders of Paramount’s non-voting B stock. They argued that a Skydance takeover would leave them with little financial benefit compared to Redstone.

Should Sony and Apollo’s efforts prevail, they would claim a company that is not only home to the sprawling US studio operation, but international networks such as Channel 5 in the UK and Network 10 in Australia, as well as streamer Paramount+ and Pluto TV.

Sony, unlike other Hollywood studios, has not invested to date in an expensive direct-to-consumer streaming play and has also not been weighed down by cable channels delivering declining revenues.

Today’s news comes three weeks after Skydance entered exclusive talks with Paramount, following initial interest that emerged late last year.

Skydance was founded in 2010 by Ellison, son of Oracle co-founder Larry Ellison, and is backed by companies including All3Media’s prospective owner RedBird, KKR and China’s Tencent.