Paramount Worldwide (PARA) 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. It is unclear how he would finance the buyout.
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.
“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.
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 would consider running them more profitably, Bloomberg noted.
Wells Fargo analyst Steve Cahall, who recently updated stock at Equal Weight due to the potential value of unlocking M&A, added Allen’s deal seems most likely.
« While investors were initially skeptical about the financing ability of Allen’s offering, we believe he wants linear assets and that there are many buyers for the studio/content. This increases the likelihood of something happening that will keep stocks high,” he wrote Wednesday. “The implication is that the studio/real estate is financing the transaction.”
Paramount has 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.
