Last week, the leading stock in the S&P 500 was Paramount Global (PARA), as its shares soared amid mounting speculation of a potential acquisition. Content production entity Skydance Media and private equity firm RedBird Capital Partners have shown interest in acquiring PARA’s assets.
Although the acquisition process is still in its early stages, non-disclosure agreements have been signed, and a small team is currently evaluating the financial figures, there is no official process or dealbook yet.
The potential acquisition could manifest in several ways; one may involve Skydance and RedBird Capital purchasing a majority stake in PARA’s parent company, National Amusements (NAI). The Norwood, Massachusetts-based company controls 77% of Class A shares of PARA’s stock.
If RedBird and Skydance acquire shares in NAI, it could pave the way to steer the company without entirely purchasing it. This would enable the group to strategically detach underperforming assets or cultivate a partnership with a strategic ally.
RedBird and Skydance could avoid managing PARA’s KCBS-TV channel or cable networks. There could be efforts to execute a phased divestiture, dispensing CBS and TV stations and packaging some cable channels. Hence, a plausible scenario might involve targeting PARA’s intellectual property and Paramount Pictures for acquisition.
Despite Shari Redstone, President of NAI and PARA’s non-executive chair, historically asserting that her company – rooted in a drive-in cinema business originally founded by her grandfather – was not up for sale, recent activities indicate a possible change in stance.
Last month, PARA’s board of directors endorsed “golden parachute” compensation arrangements for its Chief Executive, Bob Bakish, along with other top-level executives. These moves ignited speculation around Redstone’s receptiveness to incoming offers.
As a majority stakeholder in NAI, Ms. Redstone holds the domain over the majority of the voting rights in PARA. Consequently, her ownership gives her an authoritative influence on final decision-making. However, for another party to negotiate acquiring those NAI shares from Ms. Redstone would significantly ease the path for a potential buyout of PARA.
The acquisition rumors propelled PARA’s shares to their highest level since May, placing them in positive territory for the first time this year. The stock increased by…
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