180 billion, a second-generation female entrepreneur sells the company

An epic-level acquisition is about to take place.

The investment community learned that a super consortium composed of Sony and private equity giant Apollo has officially submitted a cash acquisition offer worth $26 billion to Paramount, making it the largest cash acquisition deal globally this year.

Gone are the glory days, as the Hollywood giant, which has produced countless classic films such as "The Godfather," "Titanic," "Forrest Gump," and "Transformers," is changing hands once again. Before this, various financial consortiums were watching eagerly and engaging in fierce competition. In a hidden episode, Wanda Group in 2016 also once negotiated to acquire Paramount, almost bringing the studio under its wing.

The latest news is that Paramount has agreed to enter formal negotiations with the Sony-Apollo consortium. Paramount is now controlled by Shari Redstone, the daughter of the late media tycoon Sumner Redstone, who has already decided to sell the company.

This year's largest acquisition, worth $180 billion, Wanda has also considered buying.

Behind every acquisition, there is always an exciting game.

On May 1st, a bid letter from the Sony-Apollo consortium was laid in front of Paramount: $26 billion, including the assumption of debt, which is an almost irresistible price. Given the company's current market value of around $9 billion, this offer could probably buy three Paramounts.

Apollo, one of the world's four largest private equity firms, has long coveted this acquisition. In mid-March of this year, news emerged that Apollo had been in contact with Paramount, exploring the possibility of an acquisition, with Apollo playing more of a financial role.

But according to the terms of the new bid, the real protagonist is Sony - holding the majority of the shares, becoming the controlling shareholder; while Apollo will own a minority stake and relinquish operational control.

Now, the timing of this $26 billion offer couldn't be better.

At this moment, negotiations between Paramount and another bidder, Skydance Media, led by the son of Oracle founder Larry Ellison, have entered a stalemate. Six months ago, Skydance had already signaled its intention to acquire Paramount.

For this, Skydance first approached Paramount's current leader, Shari Redstone. She inherited her father's shares in 2020, and Skydance came straight to the point, proposing to acquire a premium stake in the Redstone family's shares. The Redstone family was tempted, but other Paramount shareholders were not on board, simultaneously urging Paramount to consider other offers.

In the end, Paramount's parent company reached an exclusive 30-day negotiation window with Skydance Media, with the deadline set for May 3 - just two days after the Sony-Apollo consortium made an offer. The latest news is that the Paramount special committee has initiated deal negotiations with Sony and Apollo.

In the game of acquisition, the Paramount deal is pushed to the next climax, but this tug-of-war is far from over.

In fact, Paramount has attracted interest from more than just that. In December 2023, another investment group RedBird Capital and Skydance Media were both reported to be considering acquiring control of Paramount. Reports indicate that the consortium values the IP and control over Paramount Pictures.

Soon, another competitor emerged - Warner Bros. Chief Executive Officer David Zaslav met with Paramount CEO Bob Bakish in New York to explore possible mergers; subsequently, media mogul Byron Allen also made an acquisition offer.

Back in 2016, the Chinese company Wanda Group also held discussions and planned to acquire 49% of Paramount's shares when Paramount was valued at $8-10 billion. However, the deal fell through in the end.

With time flying by, Paramount is about to create a record for the largest acquisition deal of 2024.

Coincidentally, at the just-concluded Berkshire Hathaway shareholders meeting, Warren Buffet also mentioned Paramount, lamenting it as a failed investment of his own, saying "we've sold all of it, and lost a lot of money." Charlie Munger, while he was still alive, had opposed this investment, bluntly stating, "New York Broadway stage plays are an investor's nightmare."

Once creators of Hollywood legends, now heading towards a sell-off.

Even those unfamiliar with Paramount must have seen at least one of the following movies - "The Godfather," "Saturday Night Fever," "Indiana Jones," "Forrest Gump," "Transformers," "Titanic," "Star Trek," "Mission: Impossible," "Tomb Raider," "The Truman Show"... all these iconic works in film history were produced by Paramount. And its story is even more fascinating than the movies.

Founded over a century ago, Paramount was established by founder Adolph Zukor, who was born in Hungary and started his career by running vaudeville theaters. In those days, movies were often squeezed into small and old shacks, only attracting poorly educated immigrants to watch. Zukor was determined to bring movies into the middle-class circles.

Thus, in 1912, he teamed up with cinema giants Daniel and Charles Frohman to create the Famous Players film company, with the slogan "Famous Plays by Famous Players," which was the predecessor of Paramount.

By 1916, the future-renowned Paramount Pictures was officially established. Paramount's early expansion was extremely rapid, and by the early 1930s, it had already become one of Hollywood's leading film studios. However, it went through ups and downs, even facing bankruptcy at one point.

The turning point came in 1966 when an oil capital group acquired Paramount. Over the next 20 years, Paramount produced a host of classic films like "Love Story," "The Godfather," and "Indiana Jones."

In 1993, entertainment giant Viacom and the former CEO who had already left waged a fierce battle to acquire Paramount, with Viacom winning the battle with a sky-high bid of $10 billion.

Subsequently, Paramount welcomed the first woman in Hollywood history to lead the eight major film studios - Sherry Lansing. Under her leadership, classics such as "Braveheart," "Forrest Gump," "Titanic," "Mission: Impossible," "Face/Off," "The Truman Show," and "Saving Private Ryan" were successively released, ushering Paramount into another prosperous era.

After that, within less than three years of the merger with DreamWorks, Paramount once again split, going through years of infighting among Viacom's top management. The industry had already changed dramaticallyat this point. Watching newcomers like Disney and Netflix rise, this Hollywood giant with over 100 years of history could not hide its decline.

In 2019, the company merged with another media giant CBS and was renamed Paramount Global. However, since then, Paramount's stock price has plummeted year after year, with few classic film and television works like "The Godfather" being produced. Throughout this long century, Paramount reluctantly faced its decline.

As the second generation decides to sell the company and exit gracefully.

Today, Paramount is controlled by Shari Redstone - a typical second-generation woman.

Her father was the media tycoon Sumner Redstone, who coined the phrase "content is king." There was a time when the only other media mogul who could be compared to Sumner Redstone was Murdoch.

In August 2020, Sumner, at the age of 97, passed away. Prior to this, there had been numerous internal struggles over control of Paramount, leading to disputes among Sumner's ex-wives, children, and friends, even resulting in court battles. In the end, his daughter Shari endured many years of internal struggles and finally took control of this vast media empire.

However, despite her efforts, she could not revive Paramount and eventually decided to sell the company.

Such a scene is not unfamiliar to us. Since the average birth year of the founders of China's top 100 family businesses was in the late 1950s, most of them are now in their 60s and 70s, gradually reaching the point of passing on the baton. So here comes the question: will the second generation take over or sell the company?

Looking around, cases of the second generation taking over are constantly emerging; at the same time, selling the company has also increased.

Remember the beginning of 2024 when the A-share market saw its largest acquisition deal - MicroPort Medical acquiring the controlling rights of Healtine Medical for 6.65 billion yuan, causing a stir. Behind this acquisition, there was another hidden story. Healtine Medical founder Cheng Zhenhui's son, Cheng Ling, did not hold high positions in the company, allegedly showing no intention to take over his father's business.

In the end, founder Cheng Zhenhui handed over his controlling rights, but also maximized his own interests, making it a win-win situation.

With the rise of mergers and acquisitions, the reluctance of the second generation to take over is also one of the reasons. Morning Investment once compiled a set of data showing that among unlisted family businesses, only 15% are preparing for the next generation to take over; among listed family businesses, over half experience changes in control within 5 years of listing. Most family business owners decide to sell their businesses before retirement.

Under the vast backdrop of time, selling the company and exiting gracefully sometimes is a good story ending; while handing the company over to more suitable hands may be the best way to continue their legacy.