WHEN: Today, Thursday, April 11, 2024
WHERE: CNBC's "Squawk on the Street"
Following is the unofficial transcript of breaking news from CNBC's David Faber on "Squawk on the Street" (M-F, 9AM-11AM ET) today, Thursday, April 11. Video will be available on CNBC.com.
All references must be sourced to CNBC.
DAVID FABER: Let me, let me give you a quick report on what's going on right now because it is interesting. We are in that 30-day exclusive period, of course that will inspire actually in early May, in which David Ellison along with his partners at the private equity firm RedBird, are negotiating a transaction under which as I've said any number of times, but of course, it's worth coming back to that would involve both buying National Amusements where the control stock is held, and Shari Redstone would sell it. They've already agreed is my understanding. I think others may have reported this to a price there. That was done that was done actually months ago, still subject to due diligence, but they've agreed. The key though, is the negotiations between this buying group and Paramount itself and the special committee, of course, for the board of directors. By the way, the big story that Julia has been covering, for example, is the fact that four directors on Paramount's board are going to step aside at the annual meeting. But what I'm gonna come back to Jim is the deal itself because you've already had a number of shareholders coming out saying, wait a second, you're gonna dilute us, you're gonna pay a premium for Shari's stock and what we get out of it. And you might imagine there's some frustration in the Ellison camp in the sense that they can't really explain their deal. They don't yet really have that deal fully in place. But I can give you some sense at least based on any number of conversations I've had with people close to and familiar with their thinking as to what they're talking about. First of all, you still need to negotiate an exchange ratio by which Paramount would essentially buy Skydance that is part of this deal. It's not a one-time deal where they just buy control of National Amusements. They've linked the two - National Amusements, gotta buy that. You also need to get a special committee that agrees that you can merge Skydance into Paramount. So your need, you need Paramount to come up with an exchange ratio, that's being negotiated. They're narrowing that range and in fact, next week, for the first time, Ellison's group, the Ellison - RedBird group is going to begin conducting due diligence at Paramount. They are having meetings with management and that process is beginning so they're deep into this. They haven't yet agreed to though an exchange ratio. And as I have reported a number of times beyond the equity that would be exchanged for Skydance, you would also have an additional equity issuance by Paramount for which RedBird, Ellison Larry Ellison, KKR, which owns some of Skydance would step up and buy more equity that would be used in part to de-lever and do a number of other things. The plan on the part of of Ellison is to radically restructure Paramount, massively cut costs in terms of rationalizations, and get the stock to frankly, they believe what could be multiples of the current price. That's their hope and their plan. That by the way, is what Shari Redstone has signed off on right now, despite the fact that from what I've heard, there may have been a couple of opportunities she had to sell National Amusements and only National Amusements at a higher price than she's agreed to currently with Ellison because she believes in this plan and she would remain a shareholder by the way in in the new pro forma company holding on to her common, her non-voting stock. Will it all happen? What are the synergies, for example, available? Could it be billion, could it be 2 or 3 billion in synergies? There aren't certain but they certainly have a good deal of confidence, Jim, that in fact, they can reduce costs, de-lever and essentially restructure Paramount in a way, by the way that would have reverberations far beyond Paramount itself. Because we talk so often about streaming ,direct to consumer, whether it's Netflix or Disney or Peacock or Warner Brothers Discovery's Max and so it will be very interesting if this deal actually does happen to see what comes out of it.