Landon Capital

Media heiress Shari Redstone abruptly pulled the plug on talks with David Ellison’s Skydance Media on Tuesday, effectively nixing the potential sale of a controlling stake in Paramount Global to the independent studio, insiders revealed.

Redstone, Paramount’s largest shareholder, made her move just as an agreement seemed imminent. A special committee of Paramount’s board was poised to discuss the deal when they were blindsided by the news that Redstone had called it off.

The daughter of the late media mogul Sumner Redstone, Shari had been expected to offload her family’s stake to Ellison as part of a $2.25 billion transaction for National Amusements, the family’s holding company. This deal was a piece of a larger $8 billion puzzle that would have merged the storied Hollywood giant, Paramount, with the smaller Skydance. Despite agreeing on the financial terms, National Amusements stated it “could not come to agreement” with Skydance on other, unspecified issues. The Wall Street Journal, citing knowledgeable sources, first reported the collapse and suggested that Redstone might now pursue selling National Amusements without merging Paramount.

National Amusements, which owns theaters in the U.S., Britain, and Latin America, holds 77% of Paramount’s class A voting stock. Two other potential buyers, independent producer Steven Paul and Seagram heir Edgar Bronfman (backed by Bain Capital), are now eyeing the stake, giving Redstone the tantalizing prospect of a bidding war, according to an insider.

The Skydance negotiations, which had dragged on for more than six months, reportedly hit a snag over issues beyond economic terms. Talks continued through the weekend to iron out concerns like Redstone’s demand for indemnity against any lawsuits stemming from the deal. The negotiations stalled over another of Redstone’s conditions—that the majority of Paramount’s non-family shareholders endorse the merger.

Another source close to the negotiations claimed Redstone soured on the deal after Ellison’s team reduced their offer for her Paramount holdings. The sale of National Amusements’ controlling stake would have been crucial for a second transaction, where Paramount would acquire Skydance in an all-stock deal.