An epic acquisition deal has been conceived. A super consortium formed by Sony and the private equity giant Apollo has officially submitted a cash acquisition proposal to Paramount worth $26 billion USD (approximately 180 billion RMB), which may become the largest cash acquisition deal in the world this year.
This former Hollywood titan, once glorious in its heyday, nurtured countless universally loved movie classics such as “The Godfather,” “Titanic,” “Forrest Gump,” and “Transformers,” now seems on the brink of a change in ownership. In this process, countless consortia are eagerly ready to compete with high spirits. One lesser-known detail is that, in 2016, Wanda Group also attempted to bid for Paramount, but the deal ultimately fell through.
Now, Paramount has agreed to enter formal acquisition negotiations with the Sony-Apollo consortium. It is known that Paramount’s actual controller is Shari Redstone, the daughter of the late media mogul Sumner Redstone, who has long had an intention to sell the company.
Behind the fascinating confrontations is always an attention-grabbing acquisition case. By May 1st, Paramount faced an irresistible offer of $26 billion USD, which also included the assumption of the company’s debt. This offer was almost enough to buy three times the shares of Paramount, far exceeding its current market value of about $9 billion USD.
In this acquisition, Apollo, one of the four largest private equity firms in the world, had long coveted Paramount. As early as mid-March of this year, Apollo made contact with Paramount and discussed the possibility of an acquisition. However, according to the latest bidding details, the real protagonist is Sony — set to become the controlling shareholder with a majority stake; Apollo, in contrast, will hold a minority stake and has relinquished operational control.
At the same time, Paramount is going through a tug-of-war with another competitor, Skydance Media — led by the son of the founder of Oracle, who had announced acquisition intentions six months ago and had directly approached Paramount’s Shari Redstone for the purchase. The two sides discussed excessive premium acquisition options, affecting the Redstone family. Despite other shareholders of Paramount being unenthusiastic and urging the company to evaluate other bids, both parties finally established a 30-day exclusive negotiation period. Notably, this period ended just two days after Sony-Apollo submitted their proposal, that is, on May 3rd.
Recent reports have revealed that Paramount’s special committee has initiated proceedings for trade negotiations with Sony and Apollo. In this contest, Paramount’s acquisition is facing a new climax, and the tug-of-war is far from over.
In fact, other investment teams have also shown great interest in Paramount. For example, in December 2023, investment group RedBird Capital also announced their intent to acquire control of Paramount.
Recent reports have disclosed that a consortium has shown significant interest in the intellectual properties and control of Paramount Pictures. Meanwhile, David Zaslav, CEO of Warner Bros. Discovery, met in New York with Paramount CEO Bob Bakish to discuss potential merger talks. Media tycoon Byron Allen also made an acquisition proposal for Paramount.
Looking back, in 2016, China’s Wanda Group attempted to acquire 49% of Paramount shares, valuing Paramount between 8 to 10 billion USD at that time. However, the deal did not materialize. Time flies, and now Paramount might soon become the maker of the most significant acquisition case of 2024.
The highlight globally was the recently concluded Buffett shareholders’ meeting, where the famous investor Warren Buffett mentioned Paramount and admitted it was a failed investment. They sold all their shares, resulting in significant losses. Buffett’s longtime partner Charlie Munger, in his lifetime, had expressed negative sentiments about this investment, saying New York Broadway plays are an investor’s nightmare.
Paramount has a history spanning over a century. Its founder, Adolph Zukor, was a Hungarian immigrant who managed vaudeville theaters. In 1912, he co-founded the Famous Players film company with other cinema industry magnates, considered the mother of Paramount. In 1916, Paramount was officially established.
Paramount experienced rapid expansion in its early days and rose quickly to become a leading Hollywood film studio in the early 1930s. However, it inevitably faced financial struggles until it was acquired by an oil capital group in 1966. Afterward, Paramount created a series of hit films.
In 1993, Viacom, under its former CEO, launched a fierce bidding war for Paramount and eventually won with a price of 10 billion USD. Under the leadership of Sherry Lansing, Paramount released many famous movies such as “Braveheart” and “Forrest Gump,” marking another period of prosperity.
Subsequently, Paramount experienced a brief merger and separation with DreamWorks, as well as prolonged disputes at the top level of its parent company Viacom. During this period, the entire film industry underwent a significant transformation.
Having witnessed the rise of industry newcomers like Disney and Netflix, this century-old Hollywood film industry giant has had to confront its own decline. In 2019, the company merged with another entertainment giant, CBS, and subsequently rebranded as Paramount Global. However, Paramount’s stock price has continued to fall after the merger, and the company has rarely produced classic works like “The Godfather” since then.
Paramount, through the ages, has eventually come to a path of decline. When the company was handed over to Shari Redstone, a second-generation media magnate, after her father Sumner Redstone, a media mogul who championed “content is king” and was only rivaled by fellow titan Murdoch, passed away in August 2020 at the age of 97. In the time leading up to his death, the battle for control of Paramount was tumultuous, and Sumner’s marriage and family ties were fractured due to corporate power struggles. Despite the challenges, Shari ultimately succeeded in taking control of the vast media empire.
Even so, Shari’s attempts to revive Paramount have fallen short of expectations, and she has chosen to sell the company. This is undoubtedly a typical scenario faced by many family businesses. Most founders of family businesses in China were born in the 1950s, and the majority have now reached the age of 60 to 70, making succession or transfer of ownership an unavoidable issue. While many family businesses opt to pass the torch to the next generation, there is an increasing trend to sell the company.
For example, the A-share market in early 2024 witnessed an unprecedented acquisition, with Mindray Medical securing control of HuiTai Medical for a staggering 6.65 billion yuan, becoming a focal point at the time. The son of HuiTai Medical’s founder Cheng Zhenghui did not participate in the company’s management, and there were rumors that he was reluctant to inherit his father’s business. In the end, Cheng Zhenghui chose to transfer control while also retaining the family’s interests as much as possible, which was seen as a win-win deal.
The prevalence of family business mergers and acquisitions is partly due to the second generation’s unwillingness to succeed. According to data from Chenyi Investment, many unlisted family businesses have only a 15% succession plan, and more than half of the listed family businesses have experienced a transfer of control within five years of listing. Facing retirement, the vast majority of entrepreneurs choose to sell their companies.
In such a context, selling the company and exiting gracefully can sometimes be a beautiful way to end a story. Handing over the business to more capable hands might be the best long-term plan for these companies.
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