UPDATED: Investors rallied behind Paramount Global‘s stock after Byron Allen emerged as an unexpected bidder in the latest twist in the media company’s ongoing M&A drama.
Shares of Paramount Global rose more than 13% in early trading Wednesday on news that the media mogul’s Allen Media Group made an unsolicited $30 billion acquisition offer to acquire the entertainment conglomerate. The stock was trading in heavy volume at over $15/share — though still well under its 52-week high of $25.93. By the end of the session, amid declines across major market indexes, enthusiasm had cooled: Paramount closed up 6.7%, to $14.59.
Allen Media Group is offering $21.53 per share for all of Paramount Global’s Class B nonvoting stock — a 57% premium over the Jan. 30 closing price of $13.68 — and $28.58/share for the Class A voting stock, per Bloomberg, which first reported the proposal. The $30 billion price tag would include the assumption of debt; Allen Media said in a statement that it has lined up unnamed “strategic partners” to fund the transaction.
Reached Wednesday, a Paramount Global rep declined to comment.
If successful in swinging a deal, Allen would sell off Paramount Pictures, Paramount Global’s real estate assets and some of its intellectual property, while retaining the company’s TV networks and Paramount+ streaming service and operating those “on a more cost-efficient basis,” according to the Bloomberg report, citing anonymous sources. Meanwhile, Paramount Global has been rumored to be looking at mass layoffs in early 2024.
Allen’s takeout of Paramount is not a fait accompli. Also angling to acquire the media conglomerate is Skydance Media’s David Ellison, who has been in talks to acquire Shari Redstone’s National Amusements Inc. (which owns a controlling stake in Paramount Global).
At this point, the financing behind Allen’s bid is unclear, “casting a shadow on the offer’s credibility,” MoffettNathanson analysts led by Robert Fishman wrote in a research note Wednesday. “Without financing details, we are not sure what the impact will be on the ongoing processes others are pursuing for [Paramount Global] and NAI’s controlling stake.”
“In placing a bid for Paramount, Mr. Allen is seeking control of a company with increasingly challenged fundamentals,” the MoffettNathanson team wrote, noting that by assuming the company’s debt he could run the risk of triggering change-of-control covenants. Regarding the detail that Allen reportedly would focus on running the company’s linear networks and streaming service more efficiently, the analysts added, “we wish him the best of luck!”
Amid the M&A chatter surrounding Paramount Global, Allen in December revived his attempt to buy BET Media Group for $3.5 billion from the media conglom. That proposal clearly did not go anywhere.
Paramount Global’s TV business, which includes CBS, Nickelodeon, MTV, Comedy Central and BET, has suffered from a decline in advertising and viewership while its streaming division is still in the red. As of September, it reported $15.6 billion in long-term debt. The company is scheduled to release Q4 2023 earnings on Feb. 28.
L.A.-based Allen Media Group’s holdings comprise 12 cable networks, including the Weather Channel, a theatrical movie distribution company and 28 broadcast stations. The company also produces, distributes and sells advertising for 73 TV shows.
Pictured above: Tom Cruise and Hayley Atwell in “Mission: Impossible Dead Reckoning” from Paramount Pictures and Skydance
