Paramount Global (PARA) experienced a significant surge in its stock price, climbing up to 8% on Thursday. The reason behind this boost was the news of a potential take-private deal with production studio Skydance Media. The market response was initially positive, but shares eventually leveled out as investors absorbed the information.
According to CNBC, Skydance Media, along with financial backers Redbird Capital and KKR, is currently in talks to acquire National Amusements. This holding company houses Paramount and controls the media giant through its class A shares. Shari Redstone, the non-executive chairwoman of Paramount Global and president of National Amusements (NAI), owns approximately 10% of Paramount’s equity capital value and maintains 77% of voting shares.
The deal being discussed is still in the early stages and would involve merging Skydance with Paramount. This merger would likely result in Paramount going private. However, it is important to note that these talks could potentially fall through.
Aside from Skydance, Warner Bros. Discovery (WBD) has also been rumored as a potential buyer for Paramount. In December, WBD CEO David Zaslav and Paramount CEO Bob Bakish reportedly met to discuss a possible merger. Both companies have declined to comment on the meeting. Paramount has become an attractive prospect for a breakup or merger due to its relatively small size compared to its competitors. This has resulted in some consumers overlooking the company, as they prefer to subscribe to a limited number of streaming services.
Paramount’s current market capitalization stands at around $9 billion, significantly lower than Disney’s $171 billion and Netflix’s nearly $240 billion. The company’s smaller size has made it a target for potential mergers or acquisitions.
In conjunction with the M&A speculation, Paramount announced layoffs in an internal memo on Thursday. The memo cited the need for the company to operate more efficiently and reduce costs. The specific number of layoffs and the timeline for implementation were not provided. The memo also revealed that Paramount aims to drive streaming profitability and focus on content with the greatest impact by 2024. As a result, there will be a decrease in the production of international content.
Overall, Paramount Global’s stock surge on news of a potential take-private deal with Skydance Media has generated excitement in the market. However, it is important to remember that these discussions are still in the early stages and may not come to fruition. Paramount’s smaller size relative to its competitors has made it an attractive target for mergers or acquisitions, and the company is taking steps to streamline its operations and focus on profitable streaming content.