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Paramount Global (PARA) stock rose as much as 8% on Thursday following news of more M&A, before dropping about 5%. This time, the news is that production studio Skydance Media wants to take all of Paramount’s shares private.
According to CNBC, Skydance and financial backers Redbird Capital and KKR are working on a deal to buy National Amusements, the holding company that owns Paramount and controls the media giant through its Class A shares.
Shari Redstone currently serves as Non-Executive Chairman of Paramount Global and President of National Amusements (NAI).
Notably, NAI owns approximately 10% of Paramount’s capital value and maintains 77% of its voting stock. That equates to a value of about $1 billion, but that doesn’t take into account what could be a “meaningful control premium,” Wells Fargo analyst Steve Cahall wrote. Recent notes to clients.
The deal is in early negotiations and is contingent on a merger between Skydance and Paramount, which would likely result in the media company being taken private, according to reports. Of course, there is a possibility that the negotiations will break down.
Paramount and Redbird Capital declined to comment. National Amusement and Skydance Media did not immediately respond to Yahoo Finance’s requests.
Following the M&A buzz, Paramount announced the layoffs in an internal memo late Thursday, citing the need to “operate as a leaner company and reduce spending.”
“As in past years, this means we will continue to reduce our workforce globally. These decisions are never easy, but they are essential to our path to revenue growth,” the memo said. has been written. No specific numbers or schedule have been provided.
The memo, obtained by Yahoo Finance, also revealed that the company will work to increase streaming profitability in 2024 and maximize content that has “the greatest impact.” That means less international content production.
The long-rumored sale of Paramount
Besides Skydance, Warner Bros. Discovery (WBD) has also been rumored as a potential buyer. WBD CEO David Zaslav and Paramount CEO Bob Bakish met in December to discuss a possible merger, Axios first reported.
Although both companies declined to comment on the meeting, it is certain that Paramount’s small size relative to its competitors made it the industry’s No. 1 candidate for a breakup or merger, and it also This means that some consumers who wish to pay more will be turned away. Lots of streamers.
The company’s current market cap is only about $9 billion, compared to Disney (DIS)’s market cap of $171 billion and Netflix’s (NFLX) market cap of about $240 billion.
The company recently committed to selling non-core assets in an effort to reduce debt and improve its balance sheet. Late last year, after publishing giant Simon & Schuster’s sale to Penguin Random House collapsed, the company announced it would be sold to investment firm KKR. The $1.62 billion all-cash transaction closed in October.
Two assets, Showtime and BET Media Group, have also been the subject of recent sale rumors.
In December, Bloomberg reported that Paramount was once again in talks to sell BET. This time, the negotiations are between CEO Scott Mills and Chin Chu, a former Blackstone executive who now runs private investment firm CC Capital Partners. A price tag of just under $2 billion is being considered, according to the report.
Wall Street appears to be gearing up for the next big media merger, with analysts predicting the Paramount deal could spark an M&A frenzy.
In addition to Paramount, Warner Bros. Discovery and NBCUniversal (CMCSA) are also “likely to be affected,” Bank of America analyst Jessica Lief Ehrlich predicted. [by consolidation] Over the next 18-24 months. ”
alexandra canal I’m a senior reporter at Yahoo Finance. Follow her on Twitter @allie_canal, LinkedIn, Please email alexandra.canal@yahoofinance.com.
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