Merger talks between Skydance and Paramount came to an abrupt end on Tuesday, following the intervention of Paramount's controlling shareholder, National Amusements, which terminated the deal just before its fruition.
Paramount's special committee was to vote on the deal, which captured Hollywood's attention for months, when National Amusements' lawyers sent an email to the committee, announcing it ended the talks.
While the email acknowledged that both parties had reached an agreement on economic terms, it said there were unresolved "noneconomic terms," according to sources familiar with the situation.
Paramount's special committee confirmed the reports, saying that it "did not vote on any potential transaction," thereby confirming the breakdown in negotiations at the final stage, New York Times reported.
It marks a significant setback in efforts to merge Paramount — the parent company of CBS, MTV, and Nickelodeon — with Skydance.
The rising movie studio behind "Top Gun: Maverick" has been a key partner for Paramount's film division.
Shari Redstone, the daughter of late media tycoon Sumner Redstone and Paramount's controlling shareholder, was looking to sell her family's stake to Skydance's David Ellison as part of a $2.25 billion deal for National Amusements. It was one part of a complex $8 billion transaction.
But the negotiations faced several challenges in the final week as Skydance, Paramount, and National Amusements tried to finalize the deal. Redstone wanted Skydance to provide some legal protection for the deal if investors filed a lawsuit.
The protracted and tense negotiations, which began late last year, were also marked by frequent leaks.
But the ultimate collapse of the deal was attributed to Skydance's decision to reduce the value of National Amusements to $1.7 billion from $2 billion, impacting Redstone's family personal holdings, according to reports.
Paramount's attempt to sell itself over the past six months has been as dramatic as a plot from its own series "Succession."
Since January, the company nearly sealed a deal with Skydance, considered offers from Apollo Global Management and Sony Pictures Entertainment, replaced its chief executive, and reduced its board from 11 to seven members.
Paramount continues to face financial challenges, losing hundreds of millions of dollars annually on its streaming service, Paramount+.
The collapse of the deal also puts Skydance at a significant juncture as the breakdown in negotiations is expected to strain its relationship with Paramount, its partner in producing successful films like "Mission: Impossible — Dead Reckoning Part One."
Skydance Media CEO David Ellison thanked his employees as he announced the merger collapse to them in a memo, according to Variety.
"Skydance is stronger than ever because of you, and we are stronger because of this process," he said.
"For starters, we are smarter. We know more about our business, our potential, and the marketplace at large."
