Sony and Apollo have sent letters expressing interest in buying Paramount for $26 billion as the company considers a bid for Skydance.

Sony Pictures and private equity firm Apollo Global Management sent a letter. Paramount Global The board expressed interest in acquiring the company for about $26 billion, according to people familiar with the matter.

The formal expression of interest comes as David Ellison’s Sky Dance Media, which is backed by private equity firms RedBird Capital and KKR, awaits word from Paramount’s special committee on whether to acquire the panel company. So will recommend your bid. to controlling shareholder Shari Redstone.

Sky Dance Media has yet to hear from the special committee, although it is expected to learn the special committee’s recommendations on next moves as early as Thursday, according to people familiar with the matter. Paramount’s panel may recommend approval or rejection of Skydance’s offer, or it may return to the Skydance consortium with alternatives or changes.

Spokesmen for Paramount, Redstone National Entertainment, Special Committee and Skydance declined to comment. Sony and Apollo did not immediately respond to requests for comment.

If the special committee wants to continue negotiations with Skydance, or wants more time to consider its options while speaking with Redstone Ellison’s company, the parties can extend the special window that ends Friday. It is also possible that Skydance will walk away from the deal, which it has been negotiating for months.

If Skydance goes away, Redstone could turn his attention to negotiating a deal with Sony and Apollo, which would give all common shareholders a premium payment on their shares.

Shares of Paramount Global rose more than 12 percent on news that Sony and Apollo had formally submitted a letter of interest, earlier in the day. The New York Times And The Wall Street Journal.

Redstone initially rejected Apollo’s offer in favor of exclusive negotiations with Skydance. Redstone still prefers a deal that would keep Paramount on board, as Skydance would offer, a person familiar with the matter said. A private equity firm will likely break the company apart through a series of divestments to extract value.

Sony-Apollo’s offer would make the former a majority shareholder and the latter a minority shareholder, according to a person familiar with the letter. It could also ease Redstone’s concerns that a new buyer could break up the company, as Sony is another major Hollywood player and owns Sony Pictures.

The $26 billion offer for Paramount Global values ​​the company at more than the company’s current $22 billion enterprise value.

Still, the special committee will likely want to review the financing details and seek assurances that there are no regulatory challenges to the merger with Sony, a non-US entity. To do so, the special committee would have to notify the Skydance consortium that it wants to end its exclusive negotiations, which would eliminate Skydance as a bidder, according to people familiar with the matter.

The move will be welcomed by a number of Class B shareholders, including Gameco, Matrix Asset Advisors and Aspen SkyTrust, who have publicly expressed dismay at the Skydance transaction. Skydance’s “best and final” offer includes merging its entertainment assets with Paramount, raising $3 billion to buy out common shareholders at an unencumbered price of $11 per share at about a 30% premium, and Redstone. Pay about $2 billion for its controlling stake.

Redstone could also argue that it is more comfortable moving forward at Paramount Global without a sale. Earlier this week, the board removed Bob Buckish as CEO of the company. Installing a new CEO and giving investors a new plan going forward will be necessary to appease a restless combined shareholder base, which is likely to make the Apollo-Sony bid, if genuine, the best of shareholders. It is in interest.