We know that the Paramount / Skydance merger has been rocky. But a new report suggests that Paramount Global (PARA) may be on the hook harder than anyone expected.
Scott Baker—a Paramount investor who previously filed a lawsuit in Delaware’s Court of Chancery targeting the entertainment company—is attempting to be the lead plaintiff in a case being filed by CalSTRS—the California State Teachers’ Retirement System—a pension fund with a stake in Paramount.
The CalSTRS suit notes that the original offer filed by Sony (SONY) and Apollo Global Management (APO) implied a “significantly higher value” than the Skydance offer did. But CalSTRS also does not think much of Baker’s attempt at a suit, noting that Baker “…demonstrates a lack of financial sophistication in evaluating the fairness of the price.”
Baker’s projections put Paramount’s value at $15 per share. But CalSTRS, using the Sony / Apollo offer as a yardstick, got a significantly higher figure and “…thus, much greater potential damages.”
A Misfire in Dungeons & Dragons
Separately, we have also known for some time that Paramount was working on a Dungeons & Dragons television series, a move which would have capitalized on the goodwill generated by the movie, Dungeons & Dragons: Honor Among Thieves. But, as a report notes, the interest drawn from the Amazon (AMZN) series The Legend of Vox Machina, simply underscores that Paramount has missed the boat.
While Honor Among Thieves did not really succeed at the box office, mostly thanks to its budget making recouping costs difficult, Vox Machina demonstrated that an animated series with fantasy elements can deliver.
Is Paramount Stock a Good Buy?
Turning to Wall Street, analysts have a Hold consensus rating on PARA stock based on three Buys, six Holds and four Sells assigned in the past three months, as indicated by the graphic below. After a 6.16% loss in its share price over the past year, the average PARA price target of $12.67 per share implies 22.89% upside potential.
