Paramount: Discovery Global could trade with up to 50c per share of M&A value

“Paramount’s analysis values Discovery Global at $0.00 per share. This assumes a forward EBITDA multiple of 3.8x, in-line with Versant’s trading multiple3 on January 7th, and $3.9B of next twelve months EBITDA for Discovery Global as of the estimated spin completion date. This EBITDA is based on Wall Street consensus estimates and includes the allocation of 50% of WBD‘s unallocated Corporate / Eliminations and stock-based compensation expenses. This assumption is based on the guidance provided by WBD CFO Gunnar Wiedenfels when WBD announced its separation, on June 9, that Discovery Global should account for approximately 50% of WBD’s consolidated corporate overhead expense; we have assumed the same applies for stock-based compensation. While this results in a fundamental value for Discovery Global of $0.00 per share, for illustrative purposes, we acknowledge the theoretical possibility that Discovery Global could trade with up to ~$0.50 per share of embedded M&A option value.”