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Paramount Global Stock Soars 14% on Reports of Tentative Skydance Deal

Paramount Global (PARA) - ★★★ - Ranked #50 in our Q2 2024 Mid & Small Cap Equity Rankings

Shares of Paramount Global (PARA) skyrocketed 14% on Thursday after news broke that the media conglomerate's controlling shareholder has reached a tentative agreement to sell her stake to Skydance Media.

According to people familiar with the matter, Shari Redstone, who controls Paramount through her company National Amusements' nearly 80% voting stake, has agreed to sell her shares to Skydance. The two companies have also agreed on the broad framework for a potential combination.

Paramount and Skydance, led by billionaire David Ellison, have entered into a 30-day period of exclusive talks to work out the details of a merger agreement. However, any final deal would still require approval from Paramount's board.

The talks underscore Redstone's willingness to consider selling her controlling position after years of Paramount's struggling stock performance. Shares have declined sharply as the company has lost TV viewers to streaming and invested heavily into its Paramount+ platform.

Paramount had a market capitalization of just $9.17 billion at Wednesday's close, despite owning major media assets like CBS, MTV, Showtime and a studio business.

Skydance already has an existing partnership with Paramount, having co-produced hit films like Top Gun: Maverick. But absorbing all of Paramount would represent a massive undertaking and faces potential hurdles getting a deal across the finish line.

In addition to acquiring Redstone's stake, the parties would need to construct a proposal that properly compensates Paramount's public shareholders. Paramount executives have stated their aim is to "create value for all of our shareholders" amid the company's struggles.

Wall Street clearly views the prospect of a Skydance tie-up as a best-case scenario for finally unlocking value at the beleaguered media giant. But substantial uncertainties remain about finalizing an agreement.


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