Skydance Media has restructured its bid to acquire National Amusements and merge with Paramount Global (NASDAQ:PARA), according to the Wall Street Journal. A notable aspect of the revised offer is the inclusion of a provision allowing non-voting Paramount shareholders to sell shares at a premium.
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It’s worth highlighting that media and entertainment company Paramount Global operates as a subsidiary of National Amusements. Skydance’s enhanced proposal entails purchasing a specified number of nonvoting Paramount shares at around $15 per share, representing a premium of approximately 26% over its closing price of $11.93 on May 31.
Skydance plans to inject at least $1.5 billion in cash into Paramount’s balance sheet. This capital infusion would enable non-voting shareholders to liquidate some of their holdings at a premium. Moreover, the additional cash would potentially be utilized to reduce debt obligations.
The Offer’s Structure
Skydance’s offer consists of two steps. First, Skydance would buy National Amusements, which holds approximately 77% of Paramount’s voting shares. Subsequently, Paramount would acquire Skydance.
If the deal progresses, an independent committee of directors and Skydance have explored the possibility of allowing other potential bidders for Paramount to submit offers during a limited period. Earlier, a subsidiary of Sony (NYSE:SONY) and asset management firm Apollo Global Management (NYSE:APO) made a $26 billion all-cash bid to acquire the company.
Is Paramount a Buy or Sell?
Paramount stock is down about 19% year-to-date, reflecting challenges in the cable television sector and streaming division. Amid concerns, Wall Street analysts are bearish about its prospects.
It has a Moderate Sell consensus rating based on two Buys, eight Holds, and seven Sells. The average PARA price target of $12.50 per share implies 4.95% upside potential.
