Paramount Global (NASDAQ:PARA) and Skydance Media are advancing towards a merger, with discussions to purchase out controlling shareholder Shari Redstone underway, CNBC cites sources.

Paramount Global's special committee and David Ellison's Skydance Media, supported by private equity firms KKR and RedBird Capital Partners, are honing the valuation of Skydance's assets for the merger and determining the equity to be added for recapitalization.

The parties are nearing an agreement on valuing Skydance at about $5 billion to merge with Paramount Global, CNBC writes.

Ellison and the supporting private equity firms intend to raise approximately $4.5 billion to $5 billion in new equity. Around $2 billion would go towards paying Redstone, with a significant amount also allocated for debt reduction.

The buyers are aiming to finalize the deal in May. However, delays in data provision by Paramount Global during due diligence have slightly postponed the timeline, according to three sources, CNBC notes.

The exclusivity period for merger discussions ends on May 3, but the Skydance consortium seeks a two-week extension.

Ellison is slated to become the CEO of the merged entity, Paramount Global, and former NBCUniversal CEO Jeff Shell will likely be appointed president. Current Paramount CEO Bob Bakish would leave the company.

The deal had sparked investor concerns about the deal's fairness and the exploration of alternative options. Not all shareholders are in favor of the potential $4 billion to $5 billion stock deal. Four Paramount directors departed amid Skydance merger discussions.

In a separate development, private equity firm Apollo Global Management, Inc (NYSE:APO) and Sony Group Corp (NYSE:SONY) have engaged in preliminary talks about a potential deal to buy out all Paramount Global shareholders at a premium.

Apollo had previously offered a $26 billion bid for the company and a $11 billion proposal for Paramount's film studio.

PARA stock lost 44% in the last 12 months. Investors can gain exposure to the stock via Invesco S&P 500 Equal Weight Communication Services ETF (NYSE:RSPC) and Invesco Leisure And Entertainment ETF (NYSE:PEJ).

Price Action: PARA shares were down 1.72% to $11.87 at the last check on Friday.

Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.

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