In a surprising turn of events, Wall Street bankers and prestigious law firms are reportedly set to miss out on substantial fees after media heiress Shari Redstone decided to cancel the proposed merger between Paramount and Skydance Media. Sources close to the negotiations revealed that the last-minute decision by Redstone has dealt a significant blow to financial institutions involved in the deal, potentially amounting to hundreds of millions of dollars in lost revenue.

The decision to scrap the merger came just as a special committee of Paramount's board was preparing to convene and vote on the merger proposal. Such situations typically result in reduced fees for suitors unable to finalize their agreements. Nevertheless, due to the scale and complexity of the Paramount-Skydance deal, a large number of bankers and attorneys were engaged in what was anticipated to be a landmark transaction.

A banking insider who worked on the deal expressed deep disappointment, stating, "We grinded for months and months on this deal. I feel so badly for the Paramount employees and shareholders. They really had an excellent deal, and Paramount would have gotten a second chance to grow."

The repercussions of Redstone's decision have been felt immediately, with Paramount's shares plummeting by more than 8%. This significant drop has wiped out over $1 billion in market capitalization for the media giant.

Leading law firm Latham & Watkins, under the guidance of global chair Justin Hamill, assembled a team of approximately one hundred attorneys to advise Skydance on the intricate merger, which involved the acquisition of Redstone's National Amusements and the subsequent merger with Paramount, according to knowledgeable sources. Additionally, throughout the negotiations, Skydance collaborated with three investment banks: Bank of America, Moelis & Co., and The Raine Group.

Apollo Global Management and Sony Corp. presented a rival bid that also failed to secure the deal. They sought legal advice from Paul, Weiss, Rifkind, Wharton & Garrison and financial guidance from Citigroup and PJT Partners. Bob Bakish, who previously ran Paramount during the sales process, explored potential alternatives for the company with the assistance of investment bank LionTree, led by dealmaker Aryeh Bourkoff.

According to sources, Redstone grew increasingly suspicious of Bakish, feeling that he was undermining her authority, ultimately resulting in his removal as CEO on April 29. However, law firms and banks advising Redstone's National Amusements and the Paramount Special Committee will reportedly still receive their fees, as they are not contingent upon the completion of a deal.

Notable legal advisors mentioned in this saga include law firm Ropes & Gray, working alongside financial advisor BDT & MSD Partners for National Amusements, and Cravath, Swaine & Moore, which provided counsel to the Paramount Special Committee prepared to approve the merger. Paramount received support from Centerview Partners and Rothschild & Co., while representatives from LionTree, Moelis, Raine, and Citigroup declined to comment. Other mentioned law and advisory firms did not immediately respond to requests for comments.

The abandoned merger deal between Paramount and Skydance Media serves as a stark reminder of the unpredictability and risks inherent in the financial world. As Wall Street bankers and law firms regroup, they will undoubtedly seek new opportunities to recover the substantial fees that slipped through their grasp.