Benzinga - by Piero Cingari, Benzinga Staff Writer.
Deal talks between Paramount Global Inc. (NASDAQ:PARA) and the team of Sony Group Corp. (NYSE:SONY) and Apollo Global Management Inc. (NYSE:APO) are not going well.
What Happened: CNBC’s David Faber reported during “Power Lunch” on Tuesday that people close to the situation indicated a “rethinking” of the Paramount bid.
This doesn’t necessarily mean Sony is out of the race entirely, but it suggests a full acquisition is less likely.
Faber pointed to several factors potentially influencing Sony’s decision, including the lack of a signed non-disclosure agreement (NDA), which would typically be a precursor to serious due diligence.
Additionally, Faber indicated the recent Sony’s stock price decline — over 10% since the announcement of the potential acquisition — could be giving the Japanese giant pause.
Why It Matters: A $26-billion deal is in jeopardy.
Sony’s offer from earlier this month sent Paramount’s stock price soaring 13% reflecting investor optimism around the deal.
While Sony appears to be stepping back, the door is open for other contenders. Notably, the David Ellison-led Skydance-RedBird partnership remains interested in acquiring Paramount.
This proposal envisioned a merger between the two companies, with Paramount remaining a publicly traded entity.
The crux of the deal involved Skydance acquiring National Amusements Inc., the controlling shareholder of Paramount currently owned by Shari Redstone. However, the special committee established by Paramount’s board ultimately allowed the exclusive negotiation window with Skydance to expire without accepting their offer.
According to Faber, National Amusements, the controlling shareholder of Paramount, has previously expressed interest in the Skydance bid. Whether this renewed interest translates into a successful acquisition remains to be seen.
Further complicating the situation is a critical upcoming renegotiation of Paramount’s cable network distribution deal with Charter Communications. The outcome of this negotiation could significantly impact the profitability of Paramount, and therefore its attractiveness as an acquisition target.
Market Reactions: Paramount reacted negatively to the news, with shares dropping over 5% on Tuesday. Conversely, Sony’s ADR stock price rose 6.5%, on track for its top-performing day since November 2022, following stronger-than-expected quarterly results.
Read Now: Sony Clock Strong Q4 Revenue Despite Falling PS5 Sales, Plans Stock Split And Stock Buyback
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