The Skydance/Paramount (PARA) merger just got a little murkier, as it turns out that Paramount’s “go-shop” period has borne fruit. While several companies are now out of the running, one has made a comeback and put down quite a hefty offer for the troubled media giant. That was enough to lift the media giant’s stock by 2.5% in Wednesday afternoon’s trading. The offer came from investment firm Apex Capital Trust in the form of an all-cash deal for up to $43 billion.
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It includes a complete buyout of National Amusements, which has a controlling interest in Paramount. The bid also offers $35 a share for all Class A voting shares and $23.28 for all non-voting Class B shares.
It doesn’t stop there, either; not only is it a massive buyout, but Apex will take over Paramount’s $15.8 billion debt load, pay off Skydance to the tune of $400 million, and put in an extra $10 billion in working capital to help drive Paramount’s business plan. Apex Trust called Paramount a “national treasure” and planned to treat it accordingly.
Too Good to Be True?
With an offer like that, it’s not hard to see why some would be skeptical about it. Apex basically came out of nowhere and offered up everything but the kitchen sink and probably would have thrown that in, too, if Paramount had asked.
JonesTrading merger arbitrage specialist Cabot Henderson noted that the deal “lacked credibility,” especially given that “…no one knows anything prior about a buyer who is willing to pay $43 billion.” Certainly, this offer is a surprise, and time will tell whether or not Paramount actually goes for it. But given what we’ve seen so far, there’s a pretty good chance Skydance could be shown the door with a suitcase full of cash to go with it.
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 27.03% loss in its share price over the past year, the average PARA price target of $12.07 per share implies 5.32% upside potential.
