Media heiress Shari Redstone has ended negotiations to sell her controlling stake in Paramount Global (NASDAQ:PARA) to Skydance Media, the Wall Street Journal reported. This move effectively ended the potential merger between the two companies. As the deal collapsed, Paramount shares fell 7.9% on Tuesday and an additional 1.63% in after-hours trading.
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National Amusements, the holding company of the Redstone family that oversees Paramount, cited the inability to finalize a deal with Skydance as the reason for the cessation of talks.
This comes after Skydance Media recently restructured its bid, incorporating a notable provision that would allow non-voting Paramount shareholders to sell their shares at a premium. As part of the revised offer, Skydance planned to infuse cash into Paramount’s balance sheet, which would have allowed the company to reduce debt obligations. Despite these incentives, the parties could not reach a consensus.
The Road Ahead
Redstone’s decision to end the negotiations represents a surprising turnaround, given her previous support for the Skydance merger.
However, Redstone ultimately decided to seek alternative strategies. Moving forward, she will likely explore a standalone sale of National Amusements without merging it with Paramount.
Is Paramount a Buy or Sell?
Paramount stock has declined approximately 25% year-to-date, reflecting broader challenges within the cable television sector and its streaming division. Further, the breakdown of the merger could pressure PARA stock.
Given the ongoing challenges, Wall Street maintains a bearish outlook on Paramount stock.
PARA stock has a Moderate Sell consensus rating based on two Buys, seven Holds, and eight Sells. The average PARA stock price target of $12 per share implies 8.70% upside potential.
