Edgar Bronfman Jr.’s new offer to acquire Paramount (PARA) has likely raised concerns at Skydance, as it puts both its control of the company and its own offer into question. The go-shop period has now been extended by an additional 15 days as Bronfman’s offer is considered, and that gave shares a fractional boost in the closing minutes of Thursday’s trading.
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It came as quite a surprise when Bronfman, who is best known for his time running Warner Music Group (WMG), tendered his offer just before the initial go-shop period ended (the period for Paramount to receive other acquisition offers). And indeed, Paramount made the most of that go-shop, contacting over 50 different entities to see if there was interest that might have exceeded that of Skydance.
Bronfman’s offer now stands at $6 billion. It includes buying National Amusements for $1.75 billion, investing an extra $1.5 billion into Paramount’s balance sheet, giving $400 million to Skydance for a breakup fee, and a $1.7 billion tender that would give non-Redstone shareholders $16 per share, which is just under a $5 premium against current share prices.
Cost-Cutting Continues
Meanwhile, Paramount is continuing its economization push, as “hundreds of workers” in its Times Square and West 57th Street locations in New York are poised to get the axe. Though it represents a comparatively minor portion—those “hundreds” work out to 469 out of 7,576, about 6% of the total—it is still a blow for employees who held jobs with Paramount for, potentially, years.
Is Paramount Stock a Good Buy?
Turning to Wall Street, analysts have a Moderate Sell consensus rating on PARA stock based on three Buys, seven Holds, and 10 Sells assigned in the past three months, as indicated by the graphic below. After a 24.25% loss in its share price over the past year, the average PARA price target of $12.07 per share implies 7.96% upside potential.
