National Amusements stops Skydance talks on Paramount

National Amusements has stopped talks with Skydance on a proposed merger with Paramount Global, CNBC’s David Faber reported Tuesday.

National Amusements, which is owned by Shari Redstone, the controlling shareholder of Paramount, had previously agreed to terms of a merger with a consortium that includes David Ellison’s Skydance, and private equity firms RedBird Capital and KKR. The deal had been awaiting signoff from Redstone, CNBC previously reported. National Amusements, which Redstone controls, owns 77% of class A Paramount shares.

Paramount shares closed nearly 8% lower Tuesday following the report.

Paramount declined to comment. Spokespeople for National Amusements, Skydance and Redbird did not immediately respond to requests for comment.

The Wall Street Journal earlier reported talks had ended.

It’s been a roller coaster in the months since discussions around the potential merger began.

The about face on the proposed deal not only comes days after Skydance and Paramount agreed to merger terms, but also after Paramount’s annual shareholder meeting, where the company’s leadership outlined plans for the future.

Last week, Paramount’s current leadership, the so-called “Office of the CEO” — CBS CEO George Cheeks, Paramount Media Networks CEO Chris McCarthy and Paramount Pictures CEO Brian Robbins — mapped out the company’s strategic priorities in the event the company was not sold.

The shared leadership structure was put into place in late April, when former CEO Bob Bakish stepped down.

The trio outlined a plan that included exploring streaming joint venture opportunities with other media companies, eliminating $500 million in costs and divesting noncore assets. The plan that was presented to shareholders was Redstone’s alternative option if she chose not to sell.

While Redstone noted during the beginning of the shareholder presentation the unorthodox structure of the leadership team, she voiced her support. She has approved of their ideas and leadership during their short tenure, CNBC previously reported.

Redstone has controlled the future of Paramount and whether a sale would take place.

In May, another potential buyer for Paramount surfaced — Apollo Global Management and Sony, which formally expressed interest in acquiring the company for $26 billion, CNBC previously reported. However, Redstone favored a deal that would keep the company together, and Apollo and Sony planned to break up Paramount, separating its movie studio from other parts of the business including its broadcast network, CNBC previously reported.

This is why it was no surprise when Paramount and Skydance agreed to merger terms earlier in June, CNBC reported.

Under those terms, which were still being ironed out up until Tuesday, Redstone would have received $2 billion for National Amusements, CNBC reported. Skydance would buy nearly 50% of class B Paramount shares at $15 apiece, or $4.5 billion, leaving the holders with equity in the new company. Skydance and RedBird would have also contributed $1.5 billion in cash to help reduce Paramount’s debt.

The deal with Skydance would have been valued at $8 billion, an increase from the earlier $5 billion offer.

The plan outlined by Paramount’s three leaders last week emphasized the reduction of debt and getting the company back to an investment-grade rating after it was lowered to junk status earlier this year. Paramount had roughly $14.6 billion in long-term debt as of March 31.