Paramount stock (PARA) jumped on Wednesday, gaining about 7% after the Wall Street Journal reported the media giant’s proposed merger with Skydance Media is back on the table in a recent 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.
Under the brand new proposed agreement, in response to the Journal, Skydance would purchase National Amusements for $1.75 billion after which merge with Paramount, which owns a slew of media assets, including CBS, BET, Showtime, and MTV, together with its namesake studio business and streaming platform.
The 2 sides have also agreed to a 45-day “go-shop period,” which allows other potential bidders to submit offers.
“It’s just an entire lot of uncertainty,” Bloomberg Intelligence senior analyst Geetha Ranganathan said of the brand new deal in an interview with Yahoo Finance, adding the terms are “not very clear at this point.”
But what does seem more clear is that Redstone might be protected against the specter of litigation from nonvoting shareholders — a top reason why the media mogul killed the deal last month.
“It looks like, this time around, there’s much stronger indemnification language within the agreement that ought to or could potentially protect her from a whole lot of the upcoming litigation,” Ranganathan said.
But that does not imply things are entirely set in stone, especially if history is any indication.
Skydance, which has previously collaborated with Paramount on the production of popular film franchises, including “Mission Not possible,” “Top Gun: Maverick,” and “Transformers,” reportedly revised its offer multiple times after nonvoting shareholders expressed concerns over the terms of the initial discussions, which might have given Redstone $2 billion in money as step one within the transaction.
The messiness of the negotiations has been an overhang for the corporate at large.
Amid the drama, Paramount announced the departure of CEO Bob Bakish in late April after he was reportedly at odds with Redstone over the Skydance deal. He has since been replaced by an “Office of the CEO” consortium made up of three company division heads.
The upside in Paramount’s stock price, nevertheless, signals “how excited [shareholders are] that M&A is back again on the table,” Ranganathan said.
“The one thing that we’ve to recollect, though, is that the longer and longer this whole process drags out, the less and fewer value that the assets may 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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