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Paramount Global (NASDAQ:PARAA) (NASDAQ:PARA) has reportedly entered into exclusive merger talks with Skydance Media. This decision comes at the expense of a $26 billion offer from Apollo Global Management (NYSE:APO).
What Happened: The Paramount Global board gave the nod to Skydance Media on Wednesday, allowing for a 30-day exclusivity period for negotiations, Reuters reported.
LightShed Ventures’ Rich Greenfield in an interview with CNBC, said he’s surprised Paramount turned down Apollo’s alleged $26B all-cash bid, instead opting for a Skydance deal.
“It just doesn’t makes sense to me or any of the investors I’ve been talking to,” said Greenfield.
This potential merger could mark the end of Shari Redstone‘s control over the media conglomerate, originally established by her late father, Sumner Redstone.
Following the news of these exclusive talks, Paramount’s shares saw an impressive surge of nearly 15% on Wednesday. On Wednesday, PARA closed at $13.52, a 15.0% increase since its last close while PARAA closed at $22.07 indicating a 4.65% increase since its previous close, as per Benzinga Pro.
Skydance Media, led by David Ellison, the son of Oracle co-founder Larry Ellison, has its sights set on acquiring National Amusements. This is the Redstone family’s holding company, which either directly or indirectly owns approximately 77% of Paramount’s voting class stock.
Why It Matters: The success of this sale hinges on Ellison’s ability to merge Skydance and Paramount Global. Such a merger would represent further consolidation within the media industry, which has been dealing with the repercussions of Hollywood labor strikes in the previous year and a weak advertising market. Initially, a potential deal was anticipated adding fuel to market speculation.
Since its inception through the merger of CBS and Viacom in 2019, Paramount Global has seen a decrease in value exceeding $16 billion. The company’s market capitalization dipped below $10 billion in January, despite investor interest in its streaming growth and Q1 guidance, as reported in a Q4 earnings preview.
Price Action: Paramount Global Class A shares were trading 2.45% at the time of writing this story on Thursday, according to Benzinga Pro.
Image: Shutterstock/ 4kclips
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