Why Paramount Global Stock Soared Today

Shares of Paramount Global (PARA 6.65%) rose as much as 14.8% early Wednesday, then settled to close up 6.7% after Bloomberg reported media magnate Byron Allen had submitted a $14.3 billion takeover offer.

The latest in Paramount’s takeover news

The news is only the latest in Paramount’s takeover saga; shares also climbed last month amid reports that the entertainment conglomerate was the subject of takeover interest from Skydance Media and venture capital firm RedBird Capital Partners. Sources at the time said the firms were considering whether to indirectly take control of Paramount by acquiring media company National Amusements, which currently owns around 77% of Paramount’s Class A voting shares.

Fast forward to today, and sources familiar with the situation say Mr. Allen has offered to pay $28.58 per share for the voting shares of Paramount and $21.53 for the non-voting shares — representing a nearly 50% premium from today’s closing price. Including Paramount’s debt, the total enterprise value of the transaction would be around $30 billion.

“The $30 billion offer, which includes debt and equity, is the best solution for all of the Paramount Global shareholders, and the bid should be taken seriously and pursued,” Allen Media Group said in a statement.

Paramount representatives have so far declined comment.

What’s next for Paramount investors?

Bloomberg’s sources also note that, if his bid succeeds, Allen plans to sell the Paramount film studio, real estate, and some of its intellectual property. He would keep its TV channels as well as the Paramount+ streaming service to run a more cost-efficient business.

Given Allen’s long history of failed acquisition attempts in the space, however — including an $18.5 billion offer for Paramount that was rejected last April, according to The Wall Street Journal — many industry watchers are skeptical that this offer will result in a formal agreement.

But with shares down around 40% over the past year and with more than one potential suitor circling the promising business, it’s no surprise to see Paramount stock bouncing in response today.

Steve Symington has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

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