Paramount Global (PARA) stock soared more than 10% in early trading Wednesday after Bloomberg reported that media mogul Byron Allen has made a bid to buy all of Paramount's outstanding stock for $14.3 billion.
According to the report, Allen offered $28.58 per share for the company's voting shares, marking a 50% premium compared to recent trading levels, and $21.53 for non-voting shares. It is said that he did. Including existing debt, the total transaction value would be approximately $30 billion.
National Amusements, Inc. (NAI), Paramount's holding company, owns approximately 10% of Paramount's capital value and maintains 77% of its voting stock, valued at approximately $1 billion. Shari Redstone currently serves as non-executive chairman of Paramount Global.
Allen has actively expressed interest in the company. Last year, he made a $3.5 billion bid for the company's BET and VHF channels.
“We believe PARA should act immediately on this transaction, which represents a premium of more than 50% to yesterday's closing price,” KeyBanc analyst Brandon Nispel said in a new note to clients on Wednesday. “This is probably an acceptable premium for the majority of PARA shareholders.”
“Furthermore, the cash offer is likely to be very attractive,” the analyst continued. “However, given the history of Shari Redstone (PARA's controlling shareholder) consistently believing that this business was worth more than the market or any willing third party would offer; We expect the stock to trade at a significant discount to its reported offer price.”
Nispel added that there could be a bidding war with Warner Bros. Discovery (WBD), which has also expressed interest in acquiring the company.
Byron Allen's Allen Media Group did not immediately respond to Yahoo Finance's request for comment. Paramount Global declined to comment.
According to reports, director Allen is working with Paramount Pictures, where he has produced popular films ranging from the “Top Gun: Maverick'' and “Mission: Impossible'' series to the recent blockbuster thriller “Smile'' and the children's movie “Paw Patrol.'' The plan is to sell the studio.
He will also sell real estate and other intellectual property, but will keep his television channels and Paramount+ streaming service. Bloomberg said he plans to operate them on a more cost-effective basis.
The company is bleeding money from its streaming business. Although losses narrowed, Paramount still reported a direct-to-consumer (DTC) loss of $238 million in the third quarter.
Paramount announced the layoffs last week in an internal memo obtained by Yahoo Finance. The media giant cited the need to “operate as a lean company and reduce spending.”
“As in past years, this means we will continue to reduce our workforce globally. These decisions are never easy, but they are essential to our path to revenue growth,” the memo said. has been written. No specific numbers or schedule have been provided.
Long-rumored sale of Paramount
Paramount has long been seen as a potential acquisition target. Just last week, shares soared after reports that production studio Skydance Media wanted to take all of Paramount's shares private.
Other than Skydance, Yahoo Finance's parent company, private equity firm Apollo Global Management, and competitor WBD have also been rumored as potential buyers.
WBD CEO David Zaslav and Paramount CEO Bob Bakish met in December to discuss a possible merger, Axios first reported.
Although both companies declined to comment on the meeting, it is certain that Paramount's small size relative to its competitors made it the industry's No. 1 candidate for a breakup or merger, and it also This means that some consumers who wish to pay more will be turned away. Lots of streamers.
The company's current market cap is only about $9 billion, compared to Disney (DIS)'s market cap of $177 billion and Netflix's (NFLX) market cap of $240 billion.
The company recently committed to selling non-core assets in an effort to reduce debt and improve its balance sheet. Late last year, after publishing giant Simon & Schuster's sale to Penguin Random House collapsed, the company announced it would be sold to investment firm KKR. The $1.62 billion all-cash transaction closed in October.
Two assets, Showtime and BET Media Group, have also been the subject of recent sale rumors.
In December, Bloomberg reported that Paramount was once again in talks to sell BET. This time, the negotiations are between CEO Scott Mills and Chin Chu, a former Blackstone executive who now runs private investment firm CC Capital Partners.
Wall Street appears ready for the next big media merger, with analysts predicting the Paramount deal could spark an M&A frenzy.
In addition to Paramount, Bank of America analyst Jessica Lief Ehrlich predicted that Warner Bros. Discovery and NBCUniversal (CMCSA) are also “likely to be affected.” [by consolidation] Over the next 18-24 months. ”
alexandra canal I'm a senior reporter at Yahoo Finance. Follow her on Twitter @allie_canal, LinkedIn, Email alexandra.canal@yahoofinance.com.
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