Paramount stock (PARA) moved lower on Monday after the entertainment giant announced it plans to merge with Skydance Media in a deal that would mark an end to the Redstone family's control of the company.

The agreement, announced late Sunday, comes after years of deal speculation surrounding Paramount, which is controlled by Shari Redstone through her family's holding company, National Amusements (NAI).

Paramount shares dropped about 3% in midday trading the following day as investors digested the terms of the new deal, which includes Skydance first acquiring NAI (and Redstone's stake) for $2.4 billion in cash before completing a full merger.

National Amusements owns approximately 10% of Paramount's equity capital value and maintains 77% of voting shares valued at around $1 billion.

Under the terms of the deal, Paramount Class A voting shareholders will receive $23 a share while Class B nonvoting stockholders will be able to cash out at $15 a share, representing a roughly 35% premium based on current trading levels.

Redstone ended talks with Skydance in June after months of back-and-forth, which included multiple sweetened offers from the production studio after nonvoting shareholders expressed concerns over the terms of the initial discussions.

Talks resumed less than 30 days later as Skydance amended its previous offer.

"From our perspective, this deal is likely slightly worse for the Class-B holders than the prior deal, but likely still values PARA at ~$13," wrote KeyBanc analyst Brandon Nispel. "Given other reports suggest Barry Diller's IAC is also interested in NAI, and the schizophrenic nature of previous discussions, we think it's better for investors to just sit this one out and wait to learn more about the go-forward strategy."

'Linear is challenged'

Paramount owns a slew of media assets, including CBS, BET, Showtime, and MTV, along with its namesake studio business and streaming platform. Skydance has previously collaborated with Paramount on the production of popular film franchises, including "Mission Impossible," "Top Gun: Maverick," and "Transformers."

"As a longtime production partner to Paramount, Skydance knows Paramount well and has a clear strategic vision and the resources to take it to its next stage of growth," Redstone said in a press release.

Skydance, which will be valued at $4.75 billion following the all-stock deal's completion, said it will inject $6 billion of cash into Paramount, with $1.5 billion going directly into its debt-ridden balance sheet.