Media company Paramount (NASDAQ:PARA) may finally have a deal, as it agreed to the terms of Skydance’s merger just hours ago. Investors are ecstatic, and Paramount shares are up nearly 7% in Monday afternoon’s trading.
We learned early this morning that Skydance came back with a revised offer, allowing non-voting shareholders at Paramount to sell their shares to Skydance at a premium. Essentially, the deal calls for Shari Redstone to get $2 billion for National Amusements, the company that controls Paramount. Skydance would also buy out around half of Paramount’s class B shares, offering $15 apiece, for a grand total of $4.5 billion.
Meanwhile, Skydance and RedBird Capital—which is providing financial backing on the deal—would contribute an extra $1.5 billion each to cut Paramount’s debt load. Skydance and RedBird would ultimately own two-thirds of Paramount, and the class B shareholders would own the remaining third.
Time to Cut Bait?
There’s no doubt that this has been a long process for shareholders, and it’s a safe bet that quite a few will take Skydance up on its offer of $15 per share to walk away. With even Warren Buffett himself selling off Paramount back in the first quarter, it’s easy to see where shareholders might want to just wash their hands of the whole thing.
Paramount is kind of at a crossroads right now. Its “Star Trek” lineup is mostly concluded; “Discovery” wrapped with Season Five, and “Lower Decks” is about to do likewise. “Picard” is down as well, and only “Strange New Worlds” is continuing on. Some other properties are in the pipeline, but they will take time to get here.
Meanwhile, Paramount’s linear networks are struggling, and its streaming isn’t doing so hot either. Paramount is looking a bit weak right now, and it remains to be seen if Skydance can inject sufficient life into it to make it worthwhile.
Is Paramount Global a Buy or Sell?
Turning to Wall Street, analysts have a Moderate Sell consensus rating on PARA stock based on two Buys, eight Holds, and seven Sells assigned in the past three months, as indicated by the graphic below. After a 14.68% loss in its share price over the past year, the average PARA price target of $12.50 per share implies 1.73% downside risk.
