Paramount Stock Takes 5% Hit After Reports of Sony ‘Rethinking’ Bid

The Japanese conglomerate has yet to sign an NDA for its joint bid of $26 billion with Apollo Global Management, CNBC reports

The exterior of Chelsea Factory in New York, where Paramount held one of its Upfront presentations (Photo courtesy of Paramount)

Paramount’s stock took a dip on Wall Street amid Tuesday reports that Sony is reconsidering its current joint bid with Apollo Global Management to acquire the studio.

On CNBC’s “Power Lunch,” reporter David Faber cited sources that said that Sony was “rethinking” its current bid of $26 billion alongside Apollo to acquire Paramount. Following the report, Paramount’s stock dipped 5% and is currently at $12.35/share in after-hours trading.

“The likelihood of a bid at least for the full company seems to be fading a bit,” Faber said. “There has not been an NDA signed by Sony at this point, a nondisclosure agreement that you would typically sign so you can begin real due diligence.”

Other factors Sony may be weighing include the current weakness of the Japanese yen and the company’s recently reported 7% drop in profit for the 2023 fiscal year. Faber noted that Sony may be simply considering a restructuring of its bid, possibly to “take control of [Paramount parent company National Amusements] and therefore exert control over the combined company in that way.”

The studio is also weighing a potential bid from one of its production partners, Skydance, that is being backed by RedBird Capital Partners and KKR. Paramount let an exclusive negotiating period with Skydance lapse without a deal earlier this month, but the company’s bid is still on the table.

Shareholders have voiced their favor for a deal with Sony, but such a deal would face significant government scrutiny from the Justice Department’s antitrust division. Sony and Apollo would also have to divest from Paramount’s TV networks, including CBS, to comply with FCC rules barring foreign entities like Sony from owning American television networks.

As Paramount Global chair Shari Redstone weighs the potential bids, the studio is currently run by an executive committee consisting of the three top chiefs of Paramount’s media divisions: CBS’s George Cheeks, Paramount Pictures’ Brian Robbins and Paramount Media Networks’ Chris McCarthy. The three took over following the ousting of CEO Bob Bakish.

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