Paramount shares fall after takeover rumors: 'World's worst time to sell'

Shares of Paramount (PARA) closed down more than 8% on Thursday after surging 16% the day before on reports that the company has entered into exclusive carry negotiations with David Ellison's Skydance Media.

According to one media mogul, the timing of the talks could not be worse.

"First of all, this is the worst time in the world to sell this company," IAC Chairman and Foxconns founder Barry Diller said in an interview with CNBC on Thursday." It's the perfect candidate to turn around, but you think it should be sold? Whoever is involved, whatever the basis of their involvement, there's a lot of work to be done".

According to the Wall Street Journal and Bloomberg, Paramount has opened exclusive talks with Skydance after rejecting a $26 billion all-cash offer from private equity firm Apollo to buy Skydance, which included $14 billion worth of debt.(Disclosure: Yahoo! Finance is owned by Apollo Global Koon & Company).

Paramount's streaming media business has been losing money. Although the losses have narrowed, the company's fourth-quarter direct-to-consumer (DTC) loss was still a whopping $490 million. Additionally, online e-commerce revenues are plummeting as more and more consumers cut the cord.

To turn the tide, Paramount has committed to a variety of cost-benefit programs, including layoffs, business restructuring, price increases and even a surprise dividend cut. But a potential sale has been on the agenda for months.

Skydance is targeting a two-step transaction with Paramount's holding company, National Amusements (NAI) Shari Redstone currently serves as President of Arms of NAI. She is also the controlling shareholder of Paramount Global.

National Amusements owns approximately 10% of the capital value of Paramount's equity and 77% of its voting shares, valued at approximately US$1 billion.

According to the Journal, Redstone and Ellison have agreed on terms that will allow Skydance to acquire a controlling interest in Redstone, and Skydance will then list its studios with those of Paramount - a significant contingency of the deal that must first be approved by Paramount's independent board committee. It is unclear how Ellison intends to deal with the rest of the company.

Wall Street analysts remain skeptical that the Skydance deal will go through.

"The more complicated the deal is, the less likely it is to get done," Needham analyst Laura Martin told Yahoo! Finance." Skydance's deal has two different parts ...... feels complicated."

Doug Creutz, TD Cowen's Managing Director of Asset Management, agrees, telling Yahoo! Finance, "The acquisition of NAI would allow someone to take control of Paramount, [which] wouldn't necessarily help Paramount's existing shareholders.

Paramount has long been a potential acquisition target, mainly because of its small size relative to its competitors. The company's current market capitalization is only about $8 billion, compared to $218 billion for Disney (DIS) and $273 billion for Netflix (NFLX).

Alexandra Canal He is a senior reporter at Yahoo! Please. In X @allie_canal, LinkedIn Concerned about her. (math.) genus or send an email to [email protected].

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