Sony and Apollo eye fresh Paramount bid

Source: Alamy.com

Sony Pictures Entertainment and private equity outfit Apollo Global Management have held talks about launching a joint bid for Paramount in competition with existing suitor Skydance, according to multiple press reports.

According to the New York Times, which first reported the story, the pair are not in a position to submit a bid currently, given that Paramount is in exclusive talks with Skydance.

Apollo had previously approached Paramount about a potential US$26 billion acquisition of the company, including debt, but Paramount’s board preferred to initiate talks with Skydance amid uncertainty about how Apollo would finance the deal. Apollo had previously made a US$11 billion bid for Paramount’s studio arm.

Apollo’s hand will however potentially be strengthened by a tie-up with Sony, which brings financial muscle and a solid industry record to any combination.

According to the NYT, citing unnamed sources, Sony Pictures Entertainment CEO Tony Vinciquerra hjas held conversations with Apollo over the last week with a view to making an all-cash offer for Paramount itself, rather than the indirect route of acquiring National Amusements, Shari Redstone’s investment vehicle that controls 77% of Paramount’s voting stock. The latter approach is favoured by Skydance.

The Skydance talks have however provoked pushback from some investors, who would be left with stock in a new company while Redstone secured cash for the acquisition of National Amusements.

The NYT reports that one possible option for Sony and Apollo would be for Sony to take a majority stake  with Apollo as a minority partner.

Sony, unlike other Hollywood studios, has not invested in an expensive direct-to-consumer streaming play, and lacks the large portfolio of legacy cable channels that are delivering declining revenues for other media groups.