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Paramount Global (PARA) stock soared more than 10% in early trading Wednesday after Bloomberg reported that media mogul Byron Allen has made a bid to buy all of Paramount’s outstanding stock for $14.3 billion.
According to the report, Allen offered $28.58 per share for the company’s voting shares, marking a 50% premium compared to recent trading levels, and $21.53 for non-voting shares. It is said that he did. Including existing debt, the total transaction value would be approximately $30 billion. It’s unclear how he will finance the acquisition.
National Amusements, Inc. (NAI), Paramount’s holding company, owns approximately 10% of Paramount’s capital value and maintains 77% of its voting stock, valued at approximately $1 billion. Shari Redstone currently serves as non-executive chairman of Paramount Global.
“We believe PARA should act immediately on this transaction, which represents a premium of more than 50% to yesterday’s closing price,” KeyBanc analyst Brandon Nispel said in a new note to clients on Wednesday. “This is probably an acceptable premium for the majority of PARA shareholders.”
According to reports, director Allen is working with Paramount Pictures, where he has produced popular films ranging from the “Top Gun: Maverick” and “Mission: Impossible” series to the recent blockbuster thriller “Smile” and the children’s movie “Paw Patrol.” The plan is to sell the studio.
He will also sell real estate and other intellectual property, but will keep his television channels and Paramount+ streaming service. Bloomberg said he plans to operate them on a more cost-effective basis.
Wells Fargo analyst Steve Cahall, who recently upgraded the stock to equal weight because of its potential M&A value, added that an Allen deal is the most likely.
“Investors were initially skeptical that Allen’s proposal could be financed, but he wants linear assets and believes there are enough buyers for studios and content,” he said Wednesday. .This increases the likelihood that something will come together and the stock price will continue to rise.” “That means studios and real estate are funding the deal.”
Paramount’s small size relative to its competitors makes it the industry’s number one candidate for a breakup or merger, but this also makes it a viable option for some who only want to pay for so many streamers. This means that it will be overtaken by consumers.
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