(Bloomberg) — Film producer David Ellison’s offer for Paramount Global includes an option for nonvoting shareholders to cash out a portion of their stock for about $15 a share, according to a person familiar with the matter.
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The offer, a roughly 26% premium to Friday’s closing price, is for only about 40% of the shares, according to the person, who asked not to be identified because the discussions aren’t public. The rest of the stock will roll over into the new company.
Spokespeople for Paramount and Ellison’s Skydance Media declined to comment. The Wall Street Journal and CNBC reported earlier on some terms of the deal.
Paramount’s shares rose 7% to $12.74 in New York Monday morning.
The cash payout is the latest attempt by Ellison to sweeten the terms of a deal that has faced opposition from some investors. The son of Oracle Corp. co-founder Larry Ellison is looking to take over the film and TV giant through a multi-step process that involves him buying out the Redstone family’s controlling stake and then merging his company into Paramount. The transaction currently under discussion would see Skydance valued at $4.75 billion, according to the person, who asked not to be identified discussing information that’s not public.
Another part of the transaction involves Ellison and his partners investing billions of dollars more in the business through the share offering and debt repayment. His backers include RedBird Capital Partners and KKR & Co. Skydance has agreed to put in $1.5 billion to pay down debt on Paramount’s balance sheet as part of a sweetened offer, the person familiar with the deal said. The New York Times reported earlier on Skydance’s offer.
Shari Redstone is Paramount’s chair and the matriarch of the family that owns 77% of Paramount’s voting stock through National Amusements, which will be sold for more than $2 billion, the person said. She has been pushing for a merger of Paramount with Skydance, an outcome that she believes will be in the best interests of her family’s legacy.
A special committee of Paramount board members recommended Ellison’s latest terms last week. Now the decision is largely in Redstone’s hands.
Paramount’s annual meeting is Tuesday.
Ellison’s talks with Paramount began last year. The 41-year-old producer of films such as Top Gun: Maverick has had to increase his offer as investors including Mario Gabelli and Ariel Investment’s John Rogers expressed concern that the Redstones were getting bought out a premium and other investors were facing dilution.
Apollo Global Management Inc. has made an non-binding offer for Paramount in partnership Sony Group Corp.
Read More: Shari Redstone Has Three Options for Paramount
(Updates with deal details in second and fifth paragraph and updates shares. An earlier story version corrected the composition of the special committee.)
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