And just like that, it happened. The Edgar Bronfman Jr. bid to acquire media giant Paramount (PARA) has now officially been submitted, and it is a whopper. However, shareholders do not seem especially pleased, as Paramount shares are down modestly in Tuesday afternoon’s trading. A report from The Wall Street Journal noted that Bronfman has brought in a $4.3 billion bid for Paramount and National Amusements, the company that owns a majority of Paramount.
Bronfman’s offer would give National Amusements $1.75 billion for its share of Paramount. Additionally, an extra $1.5 billion would go into Paramount as an investment, along with the assumption of $2.4 billion in debt and a $400 million breakup fee to Skydance. Reports also noted that Bronfman could up that offer to as much as $5.5 billion total.
Bronfman noted that his investor group is convinced that Paramount is actually “far more valuable” than what Skydance was offering and that his proposal would “…eliminate…the risks, uncertainties and costs of combining Paramount with Skydance.” However, there was no mention of Roku (ROKU) actually joining in on the offer.
Skydance Was Already Cutting
The new offer comes at an interesting time. Reports noted that Skydance was preparing to cut as much as 15% of Paramount Global’s workforce, including its home entertainment divisions. We know that the sports divisions got off fairly lightly, but the cuts in the home entertainment division were “…not so deep as to result in a complete loss of institutional knowledge, but they’re more than deep enough to result in major workflow disruptions.”
Yet, with Skydance’s purchase now in jeopardy from the Bronfman offer, it remains to be seen if the cuts in question will go through.
Is Paramount a Good Stock to Buy Now?
Turning to Wall Street, analysts have a Moderate Sell consensus rating on PARA stock based on three Buys, seven Holds, and 10 Sells assigned in the past three months, as indicated by the graphic below. After a 24.1% loss in its share price over the past year, the average PARA price target of $12.07 per share implies 10.63% upside potential.
