Mario Gabelli, one of the biggest shareholders at media giant Paramount (PARA), has had a lot to say about the company’s acquisition talks so far. In fact, there was talk of lawsuits at one point. However, the latest offer from Edgar Bronfman, who is best known for his time with Seagram and his time running Warner Music Group (WMG), seems to have his attention, and that prompted a modest rise Paramount stock in Wednesday afternoon’s trading. Gabelli went on record to note that he has no problem with offering a bid extension to Bronfman.
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It is particularly attractive since the Bronfman bid would ultimately avoid the “…inequitable governance arrangement” of the bid from Skydance Media. What’s more, according to the offer letter, it would remove the distractions that would come with the Skydance merger, which is itself a media property known for, among other things, The Walking Dead and Invincible.
Thus, the idea of offering an extension for Bronfman here was, overall, a good play, Gabelli noted. In fact, even if everyone was not on the same page, it was still “…hard to see a negative…” overall.
Now What?
With the go-shop period now officially expired, there is a new offer on the table. The question, however, is what is left to go from here. The idea of taking on the Ellisons here strikes some as a bad idea, but there are some who believe this is anything but.
Rich Greenfield of Lightshed Partners, for example, is willing to speculate that this may be a good plan after all. The makeup of the coalition that Bronfman got together is causing that speculation. Greenfield remained deliberately vague during a CNBC interview but noted that he saw at least one name on the list with a direct connection to the Redstones themselves.
In addition, with talks of at least a partial tender for the B-shareholders, that may actually be sufficient to draw some interest.
Is Paramount Stock a Good Buy?
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 22.78% loss in its share price over the past year, the average PARA price target of $12.07 per share implies 8.89% upside potential.
