Sony And Apollo Make $26 Billion All Cash Offer For Paramount

It looks as though the every-day Paramount buy saga could yet be coming to a close, with a all-cash, $26 billion offer made by Sony and Apollo, according to the Wall Street Journal.

Apollo and Sony, led by Sony Pictures CEO Tony Vinciquerra and Apollo partner Aaron Sobel, presented a estimate, nonbinding offer on Wednesday, the Journal reported on Thursday in an exclusive.

In this proposal, Sony would hold a majority share, while Apollo would have a insignificant stake and no operational control. This bid comes amid atumultuous sale process by Paramount’s main shareholder, Shari Redstone, which Saw a shareholder upsing and the resignation of CEO Bob Bakish along with 4 directors.

Paramount’s board has been hosting amerger with Skydance Media, led by David Ellison, and entered exclusive talks last month. The Wall Street diary reported that with the exclusive ending Friday, Paramount and its owner, Redstone, may start discussions with another curious parties.

Shareholders are upset over the possible Skydancemerger, which favors Redstone with a premium for her voting share, while others would get shares in the merged entity.

Skydance late upped its proposal, offering $3 billion to improve Paramount’s finances, a hike from $1.5 billion, and reduced payment to Redstone’s National Amusements.

Apollo previously made a $26 billion bid for Paramount, with $12 billion as equity and debit assessment, but deals about financing put the offer in double, as besides reported by The Wall Street Journal.

As for why the offer for Paramount is so tricky, Bloomberg’s Matt Levine laid it out earlier this week, writing out the key questions behind the company’s complex share structure:

• Paramount has about 655 million share outside.

• Of these 655 million shares, throughly 41 million are Class A shares, which have voting rights; the remainder are Class B shares, which don’t.

• The Class A stock trades at $22.37 per share as of Friday’s close; the Class B trades at $11.91. That gives you a combined equity marketplace capitalization of about $8.2 billion.

• Figure you’d gotta pay a premium to buy the full company. Let’s say the full equity value would be 12 billion, through a 50% premium to the current price.

• But announcement that you could take over the company — control the shareholder vote, elect fresh directors, vote for a merger, etc. — with just 21 million Class A shares. That would represent a majority of the Class A voting shares, but only about 3.2% of the full shares.

• In fact, 31.5 million Class A shares are owned by National Amusements, a company controlled by Shari Redstone, the dated and successful of erstwhile Paramount mogul Sumner Redstone. These shares represent about 77% of the voting stock, but little than 5% of the full stock.

• If you want to ask Paramount, how much should you offer to pay for Redstone’s Class A stock? For the another Class A stock? For the Class B stock?

You can read his full analysis here.