By Don Chmielewski
LOS ANGELES (Reuters) – Shari Redstone’s National Amusements has reached a preliminary agreement to sell a controlling stake in Paramount Global to David Ellison’s Skydance Media, three people familiar with the matter told Reuters on Tuesday.
The unexpected development comes just weeks after Redstone abruptly ended talks with tech entrepreneur Ellison’s Skydance and began talking to other potential buyers.
The news sent Paramount shares up 9% in after-hours trading.
Under the tentative agreement, Skydance will pay $1.75 billion to buy National Amusements, which owns 77 percent of Paramount’s voting stock. The deal includes a 45-day “shopping” period during which other bidders can submit offers, according to The Wall Street Journal, which first reported the news Tuesday.
Other bidders who have expressed interest in buying National Amusements include film producer Steven Paul, Seagram heir Edgar Bronfman Jr., and IAC chairman Barry Diller.
National Amusements has referred the Skydance deal to a special committee of Paramount’s board for review, according to two people familiar with the matter.
The sale of National Amusements is envisioned as the first part of a two-part deal, in which smaller independent studio Skydance would be merged with Paramount, home to the eponymous movie studio, CBS and cable networks such as MTV and Nickelodeon.
Paramount declined to comment, and a spokesman for the special committee could not immediately be reached for comment.
Ellison, the son of Oracle (NYSE:) co-founder Larry Ellison, has spent months pursuing Paramount, a merger that Redstone has welcomed with enthusiasm, according to multiple sources.
National Amusements owns movie theaters in the United States, Britain and Latin America, and owns the Redstone family’s 77% stake in Paramount’s Class A voting stock.
(Reporting by Don Chmielewski in Los Angeles; Additional reporting by Harshita Marie Varghese and Gopi Babu; Writing by Lisa Richwine; Editing by Shinjini Ganguly and Lincoln Feast.)