Shari Redstone ended negotiations with Skydance Media on a deal which would have transferred control of the entertainment empire Paramount to billionaire David Ellison.
The decision ends months of talks between Paramount and Ellison’s Skydance.
Skydance offered $2bn for Redstone’s National Amusements, and planned to merge Paramount with Ellison’s business through a stock transaction.
Skydance offered to buy about half of Paramount’s common shareholders for $15 per share. It also promised to inject $1.5bn in order to pay down the debts.
NAI said on Tuesday that the groups had “not been able reach mutually satisfactory terms” and it was “grateful to Skydance” for its months-long work to pursue this potential transaction.
Skydance declined to comment. The Wall Street Journal reported the news first, and shares of Paramount fell 8 percent to $11.04 as a result.
Redstone’s announcement came as a surprise to Ellison, who had been close to a settlement with private equity firms RedBird, KKR and others in recent weeks.
The Paramount special committee, which represents the interests of all shareholders of the media company, including those who do not have voting rights, has supported the bid with a non-binding approval earlier this month.
Redstone has changed her mind recently, partly because Skydance reduced the amount of money that would have been paid to NAI, while increasing the payouts to other shareholders. This was confirmed by a person briefed about the issue.
People who were close to the negotiations said that they were shocked by her decision. These people also said that the Ellison consortium agreed to “pretty well” everything NAI & Paramount asked for during multiple months of negotiation.
A NAI representative informed the board’s special comittee that no deal had been reached. According to a committee statement, the person also said that “there was no expectation” of a “path forward on this deal”.
Redstone has begun to weigh the potential offers of other bidders.
According to two sources familiar with the situation, billionaire Edgar Bronfman Jr., the heir to the Seagram drinks company, has expressed his interest in purchasing NAI for over $2bn. Bain, a private equity firm, is backing his bid. These people warned that the group would need weeks to conduct due diligence before making an official offer.
Steven Paul, a film producer, has expressed interest in Redstone.
One person who was involved in the discussion said that there is no alternative for Skydance at this time.
NAI owns only about 10% of Paramount shares, but it controls around 80% of its voting rights. Anyone who buys NAI can technically control Paramount, without needing to purchase the entire company. However, non-voting shares could challenge this move in court.
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