Paramount shares soar following Byron Allen report on $14 billion buyout

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Paramount Worldwide (FOR) shares rose more than 10% in early trading Wednesday after Bloomberg reported that media mogul Byron Allen made a $14.3 billion offer to buy all of Paramount’s outstanding shares.

According to the report, Allen offered $28.58 each for the company’s voting shares, a 50% premium to recent trading levels, and $21.53 for the non-voting shares. Including existing debt, the total value of the deal is approximately $30 billion.

National Amusements (NAI), Paramount’s holding company, owns approximately 10% of Paramount’s equity value and retains 77% of the voting stock, valued at approximately $1 billion. Shari Redstone is currently non-executive chairwoman of Paramount Global.

Allen has actively expressed interest in the company. He made a $3.5 billion offer for its BET and VHF channels last year.

“We believe PARA should immediately agree to this transaction, as it represents a premium of over 50% to yesterday’s close, which is likely an acceptable premium for the majority of PARA shareholders,” wrote Brandon Nispel , KeyBanc analyst, in a new note to clients on Wednesday.

“Also, a cash offer is probably very attractive,” the analyst continued. “However, we expect the stock to trade at a significant discount to the announced offering price, given Shari Redstone’s (PARA’s majority shareholder) history of consistently believing that the company is worth more than the market, or a willing third party, is willing to offer.”

Nispel added that there could be a bidding war with Warner Bros. Discovery (WBD), who also expressed interest in acquiring the company.

Byron Allen Allen Media Group, did not immediately respond to Yahoo Finance’s request for comment. Paramount Global declined to comment.

According to the report, Allen is considering selling the Paramount movie studio, which produced top films from “Top Gun: Maverick” and the “Mission Impossible” franchise, to the recent thriller “Smile” and the kid-friendly “Paw Patrol.” .

It would also sell real estate and other intellectual property, but keep the television channels and streaming service Paramount+. It plans to manage them more profitably, Bloomberg noted.

The company lost money in its streaming business. Even though losses were reduced, Paramount still reported a direct loss to consumer (DTC) of $238 million in the third quarter.

Last week, Paramount layoffs announced in an internal memo obtained by Yahoo Finance. The media giant cited the need to “operate like a leaner business and spend less.”

“As has been the case in recent years, this means we will continue to reduce our workforce globally. These decisions are never easy, but they are essential on our path to profit growth,” it says. read in the note. No precise figures or timetable were provided.

The long-rumored sale of Paramount

American television producer Byron Allen arrives at the Baby2Baby 2023 gala in Los Angeles, California on November 11, 2023. Allen reportedly made a $14.3 billion bid for Paramount Global.  (Photo by Michael Tran / AFP) (Photo by MICHAEL TRAN/AFP via Getty Images)American television producer Byron Allen arrives at the Baby2Baby 2023 gala in Los Angeles, California on November 11, 2023. Allen reportedly made a $14.3 billion bid for Paramount Global.  (Photo by Michael Tran / AFP) (Photo by MICHAEL TRAN/AFP via Getty Images)

American television producer Byron Allen arrives at the Baby2Baby 2023 gala in Los Angeles, California on November 11, 2023. Allen reportedly made a $14.3 billion bid for Paramount Global. (Photo by Michael Tran / AFP) (Photo by MICHAEL TRAN/AFP via Getty Images) (MICHAEL TRAN via Getty Images)

Paramount has long been considered a potential acquisition target. Just last week, the stock I jumped on the reports The production studio Skydance Media wants to privatize the entirety of Paramount.

Outside of private equity firm Skydance Apollo Global ManagementYahoo Finance’s parent company, as well as its competitor WBD, were also reportedly considered potential buyers.

WBD CEO David Zaslav and Paramount CEO Bob Bakish met to discuss a possible merger in December, Axios reported for the first time.

Both companies declined to comment on the meeting, although Paramount has certainly become the industry leader. Choice #1 for a split or merger due to its small size compared to its competitors – which also means it has been ignored by some consumers who only want to pay for a limited number of streamers.

The company currently has a market capitalization of around $9 billion, compared to that of Disney (SAY) 177 billion dollars and that of Netflix (NFLX) 240 billion dollars.

The company recently committed to divesting its non-core assets as part of its efforts to reduce debt and improve its balance sheet. Last year, he announced the sale of Simon & Schuster to investment firm KKR after the publishing giant’s sale to Penguin Random House. collapsed at the end of last year. The $1.62 billion all-cash deal was completed in October.

Show time And BET Media Group are two assets that have also recently been the subject of sale rumors.

In December, Bloomberg reported that Paramount was once again in talks to sell BET – this time to its CEO Scott Mills and former Blackstone executive Chinh Chu, who now runs private investment firm CC Capital Partners.

Wall Street looks ready that the next big media merger takes place, with analysts predicting a deal with Paramount could spark a mergers and acquisitions frenzy.

Besides Paramount, Bank of America analyst Jessica Reif Ehrlich predicted that Warner Bros. Discovery and NBCUniversal (CMCSA) are also “likely to be impacted (by consolidation) over the next 18 to 24 months.”

Alexandra Canal is a senior reporter at Yahoo Finance. Follow her on Twitter @allie_canal, LinkedIn, and email her at alexandra.canal@yahoofinance.com.

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