One week after exclusive talks began on a potential merger agreement between Paramount Global and Skydance Media, the outcome remains unclear. Earlier this week, the Wall Street Journal broke the news that four of Paramount’s board of directors would be stepping down, with at least one citing concern over the potential merger as his reason for leaving.
Some have reported that the merger would result in Paramount Global’s stock price falling after new shares were issued and the value of stock held by existing shareholders would be diluted. The deal will require board approval to move ahead.
Financial analysts are giving mixed signals about the future of the Skydance/Paramount deal. Guggenheim analyst Michael Morris expects it to happen, saying that the merger is the “path of least resistance.” He says the bottom line decision for shareholders: “Is it worth acquiring Skydance to remove Shari Redstone and attempt to re-orient the business for sustained growth?” Other analysts have been skeptical, with one stating that he had “yet to talk to a single investor that wants a Paramount/Skydance merger.”
Even though Skydance’s offer appears to be the most appealing among all the competing proposals, a group of Paramount Global shareholders is merging on the position that the company should make the necessary changes to its business strategy, without going through a potentially disruptive acquisition process. A better-term sale may be possible in “a year or two.”
See Also: Paramount CEO Brian Robbins Jokes At CinemaCon That Distribution Chief Chris Aronson “Has A Kickstarter” To Buy Studio As Skydance Deal Looms (Deadline) and Paramount Shareholders Are Outraged by Its Merger Plans: ‘They’re Basically Stealing the Company’ (Quartz)
