Yesterday, we reported that the Paramount (NASDAQ:PARA) and Skydance merger talks were getting up to speed and that things might be going well. However, all the gains seen yesterday were largely scuttled in the closing minutes of Thursday’s trading, as Paramount lost over 9% in the session thanks to the latest developments.
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The problem with the merger, reports note, is that in order for it to go through, Paramount would have to raise some cash itself and quite a bit of it. How much? A hefty $3 billion. While a lot of that equity would come from David Ellison of Skydance and his various partners, the equity brought in would be “dilutive.”
This comes alongside reports that a $26 billion offer from Apollo Global (NYSE:APO) was apparently tossed aside. Perhaps worst of all, Paramount may still need to raise the $3 billion in question even if the deal ultimately doesn’t go through.
“Worst Time in the World to Sell”
It’s the worst time in the world to sell Paramount. That’s the assertion from Fox founder Barry Diller, who noted that Paramount was an excellent candidate for an internal turnaround effort. Yet, by selling off outright, that turnaround bid falls squarely in the lap of whoever bought it. And that’s going to take what Diller calls “…an enormous amount of work.” While Paramount has been actively doing the heavy lifting of cost-cutting for some time now, it’s still got significant losses to its credit: $490 million in the fourth quarter was the amount of direct-to-consumer loss Paramount saw.
What Is the Projection for Paramount Stock?
Turning to Wall Street, analysts have a Hold consensus rating on PARA stock based on six Buys, eight Holds, and seven Sells assigned in the past three months, as indicated by the graphic below. After a 40.68% loss in its share price over the past year, the average PARA price target of $13.29 per share implies 7.52% upside potential.
