Shares of Paramount (PARA) rose about 7% on Wednesday after the Wall Street Journal reported that the media giant’s proposed merger with Skydance Media is back on the table, in a new form.
Shari Redstone, who controls Paramount through her family’s holding company National Amusements (NAI), ended merger talks with Skydance in June after months of back-and-forth.
According to the Journal, under the new proposed deal, Skydance would buy National Amusements for $1.75 billion and then merge it with Paramount, which owns a host of media companies including CBS, BET, Showtime and MTV, along with its namesake studio and streaming platform.
Both parties have also agreed to a 45-day ‘go-shopping’ period during which other potential bidders can submit bids.
“There’s just a lot of uncertainty,” Geetha Ranganathan, a senior analyst at Bloomberg Intelligence, said of the new deal in an interview with Yahoo Finance, adding that the terms “are not very clear at this point.”
But what does seem clear is that Redstone will be protected from the threat of lawsuits from non-voting shareholders — a key reason the media mogul pulled out of the deal last month.
“It appears that there are much stronger safeguards in the agreement this time around that could or should potentially protect her from a lot of the upcoming litigation,” Ranganathan said.
But that doesn’t mean everything is set in stone, especially if we go by history.
Skydance, which previously worked with Paramount on popular film franchises including “Mission Impossible,” “Top Gun: Maverick” and “Transformers,” reportedly revised its offer several times after non-voting shareholders raised concerns about the terms of initial discussions, which would provide Redstone with $2 billion in cash as an initial step in the transaction.
The messiness of the negotiations was a burden on the entire company.
Amid the drama, Paramount announced the departure of CEO Bob Bakish in late April after he reportedly fell out with Redstone over the Skydance deal. He has since been replaced by a consortium of the “Office of the CEO,” made up of three of the company’s division heads.
However, the rise in Paramount’s stock price indicates “how excited [shareholders are] that mergers and acquisitions are back on the table,” Ranganathan said.
“However, we must realize that the longer this whole process takes, the less value the assets will have,” the analyst said.
Alexandra Canal is a Senior Reporter at Yahoo Finance. Follow her on X @allie_canal, LinkedIn, and email her at alexandra.canal@yahoofinance.com.
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