Paramount (PARA) stock rose as much as 15% on Friday following media coverage. Private equity firm Apollo Global Management is in talks to acquire the media company through a joint takeover bid with Sony Pictures Entertainment.
The development comes after Paramount reportedly rejected a $26 billion all-cash offer from Apollo that included $14 billion worth of debt for the entire company. It also reportedly rejected a separate $11 billion bid from the company for just the studio business. (Disclosure: Yahoo Finance is owned by Apollo Global Management.)
“We view this as a positive development for all shareholders, including Shari Redstone,” CFRA analyst Ken Leung wrote in response to the report. Redstone and her family run Paramount through their holding company, National Amusements.
“If all of PARA's stock is purchased for cash, Apollo, as a U.S. company, could acquire network assets (CBS and local TV station licenses) and Sony could retain a stake in non-FCC licensed assets (movies).” TV shows, etc.),” he said.
Paramount declined to comment on the report. National Amusement, Sony and Apollo did not immediately respond to Yahoo Finance's requests.
Paramount is currently The company is in exclusive merger talks with David Ellison's Skydance Media, according to people familiar with the matter.
But shareholders have publicly raised concerns about the terms of the deal, which critics say unfairly benefits Redstone. Some have threatened to sue.
Amid the outcry, four Paramount board members (Dawn Ostroff, Nicole Seligman, Frederick Terrell and Rob Krieger) announced they would not seek re-election following proxy filings last week. Ta.
Mr. Ostrov, Mr. Seligman and Mr. Terrell currently serve on the independent board of directors tasked with evaluating potential bids. It is unclear whether their departures will affect ongoing Skydance negotiations.
“I hate fair market value.”
Skydance is reportedly pursuing a two-part deal targeting Paramount's holding company National Amusements (NAI). Redstone currently serves as NAI chairman.
According to the Wall Street Journal, Redstone and Ellison have agreed to terms that will allow Skydance to purchase a controlling stake in Redstone. Skydance will then merge its production studios with Paramount's studios, but this is a key contingency to the deal and must first be approved by Paramount's committee of independent directors. It's unclear what Mr. Ellison plans to do with the rest of the company.
If Skydance buys Redstone stock, its management team will receive $2 billion in cash, and investors with non-voting shares will receive a stake (and dilution) in the combined company. The company will receive 1,000 shares (shares).
National Amusements owns approximately 10% of Paramount's capital value and maintains 77% of the voting stock, valued at approximately $1 billion.
“Merger negotiations that bypass competitive bidding in favor of exclusive discussions with a single buyer may result in a company's ” Ariel Investments, Paramount Global's longtime shareholder, said in a statement earlier this month.
As of December 31, 2023, Ariel held just under 2% of the company's shares.
Citi analyst Jason Bazinet further explained the shareholder panic “about a lot of the details that have been talked about in the press about Skydance.” [include] Skydance would buy NAI's stock, essentially giving it control of Paramount without paying a premium to public shareholders. ”
He said investors were interested in alternative bidders who would “likely pay a premium to all shareholders.”
Paramount is bleeding money from its streaming business. Although losses narrowed, the company still reported a direct-to-consumer (DTC) loss of $490 million in the fourth quarter. It's also been plagued by plummeting terrestrial TV revenues as more consumers cut the cord.
Paramount has undertaken a variety of cost-efficiency plans to combat declining sales, including layoffs, restructuring, price increases and even an unexpected dividend cut. However, a potential sale has been under consideration for several months.
alexandra canal I'm a senior reporter at Yahoo Finance. Follow her on X @allie_canal, LinkedIn, Email alexandra.canal@yahoofinance.com.
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