Sony, Apollo Make Formal Overture To Paramount Board To Discuss Potential $26 Billion Deal

Paramount share are up more than 13% on the news. Investors would vastly prefer a Sony/Apollo acquisition to a Skydance deal as it is currently configured, even after Skydance made a revised offer, that was said to be its best and last, last week.

Sony and Apollo's overture is really jus a start, a non-binding expression of interest, Deadline has learned, in meeting and exploring the contours of a possible deal. While Skydance has been given access to Paramount's books for the last month, Sony and Apollo have yet to do any due diligence.

The partners would buy out the whole company and take it private. Skydance, on the other hand, is contemplating paying Shari Redstone directly for her controlling stake in Paramount through a special class of voting shares, a capital infusion and an all stock-merger with Skydance. The latest offer is said to have added a premium to take out some percentage of the more widely held Class A or common shares.

Skydance's exclusive window is set to run out tomorrow. There had been talk of possibly extending it, but it's not clear if that's happening or for how long. Shari Redstone is said to prefer the Ellison deal. Paramount's board declined to engage with Apollo when it made a solo preliminary offer for the company.

Sony would need to sell the broadcast assets, splitting up the company. Regulators would need to approve a merger of two remaining Hollywood studios. Skydance, which is backed in the bid by Oracle co-founder Larry Ellison and Gerry Cardinale's RedBird Capital, would keep it together at least for a time.

In a dramatic turn of events Monday, Paramount CEO Bob Bakish exited and three top executives - Brian Robbins, George Cheeks and Chris McCarthy stepped into a newly created office of the CEO. A CEO trio is not considered feasible long term. Bakish will remain in an advisory role through October.

And Paramount did not take any questions on its post-earnings conference Monday, which was led by CFO Naveen Chopra — giving the sense that something is coming.