Yesterday was a real shock for watchers of media giant Paramount (PARA); the stock shot up in the wake of a new $43 billion offer from Apex Capital Trust that included practically everything but the kitchen sink to take Paramount out from under Skydance. New reports, however, suggest the bid may not actually exist, and the loss left Paramount down over 3% in Thursday afternoon’s trading.
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There were concerns about the legitimacy of the offer almost from the moment it was presented. The word that Apex considered Paramount and its properties to be “national treasures” notwithstanding, it was still almost too good to be true. And now, the latest news suggests that may have been the case all along.
A press release surrounding the deal—found even on BusinessWire—left some convinced that the deal was valid. But when the release was later pulled along with any means of contacting the Apex staff involved, that got a lot of people thinking. Now, it’s unclear whether this deal was genuine in the first place, whether someone jumped the gun and announced it too soon, or what. Indeed, neither Apex nor Paramount would actually comment on the deal.
“A Big Hoax”
What’s interesting is that while there were legitimacy concerns, there are also signs now that the deal might have been a full-on hoax to begin with. IndieWire noted that the general counsel that was mentioned in the original release works for a firm called Elwood Law. That by itself might not mean so much, but some believe it was an affected portmanteau of “Elle Woods,” the main character from the movie Legally Blonde.
Moreover, another point of Apex that didn’t sit well was its move to buy a 40% share in Simmtronics. Again, nothing that would raise a hackle on first blush, but as it turned out, the Simmtronics website appears to be a week old, established with GoDaddy.com (GDDY). Thus, the mega-deal that might have won Paramount over may ultimately never be. But, like with everything else about this process so far, we’re going to have to watch and see.
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 27.97% loss in its share price over the past year, the average PARA price target of $12.07 per share implies 9.13% upside potential.
