Sony and Apollo prepare US$29 billion proposal for Paramount

The sale of Paramount Global to David Ellison’s Skydance Media could take a turn for the worse, with the entry of new interested parties into the business. According to internal sources heard by the Investing.comSony and Apollo Global Management are preparing a proposal that promises to be much more advantageous for the company’s shareholders.

With the 30-day exclusive negotiation period between PARA and Skydance set to expire on May 3, both analysts and insiders Now they see it as likely that Shari Redstone, the entertainment conglomerate’s main shareholder, will consider the Sony/Apollo duo’s offer.

Reports from Thursday (April 18) indicate that the Japanese giant may join former interested party Apollo to present such an offer, further complicating the situation of the current agreement.

David Katz, president and CIO (Chief Information Officerin English) of Matrix Asset and notorious shareholder of PARA, commented exclusively to Investing.com that the new proposal would be “significantly better for all Paramount shareholders than the current one made by Skydance”.

The executive estimated that the offer could reach up to US$29 billion, highlighting: “Apollo had made a $26 billion proposal that was not explored by the board. Now, with Sony as a partner, they have the resources for an even more advantageous deal, which could reach US$28 billion or US$29 billion, if the board convinces investors of the real value of the company’s assets.”.

Katz also spoke about the importance of the council seriously considering the proposal, given its superior economic attraction. “With Sony involved, it is difficult for Shari Redstone to ignore this more robust offer, as a determined buyer like Sony brings more possibilities to the table, including for Shari”he stated.

The president and CIO of Matrix Asset concluded by emphasizing the benefits beyond the financial: “This proposal would not only strengthen Paramount economically, but would also give impetus to its future growth, considering the excellent management of Sony and Apollo, contrary to what is observed at Skydance. The board needs to evaluate this offer immediately.”.

The deal could fail even without Sony’s interest

The possibility of failure to close Skydance’s current proposal is growing among Paramount’s significant shareholders and Board of Directors, causing intense discussions.

With the leader of renowned investor Mario Gabelli, from Ariel Investment, and Matrix Asset Holdings, these shareholders claim that the agreement favors only Paramount’s non-executive president, Shari Redstone, harming other shareholders, especially those without voting rights, due to the dilution of its holdings.

“The proposed agreement with Skydance carries high litigation risk and already presented execution challenges due to internal conflicts, even before any external interest”said Christopher Marangi, co-CIO of Gabelli Funds, in an exclusive interview with Investing.com.

Jordan Posner, managing director of Matrix Asset, shared his concerns about the Investing.com. According to him, “Ms Redstone operates based on what she considers to be best for herself, influenced by her own financial situation, and completely ignores the effects of this approach on other shareholders. To maximize its own value, it does not hesitate to adopt measures that significantly dilute the participation of other shareholders.”

The rejection of the current proposal was so immediate that it already led to the resignation of 4 members of Paramount’s Board of Directors, including 3 who were part of the 8-member committee responsible for evaluating the potential merger with Skydance.

“Four board withdrawals represent a clear rejection of the Skydance deal”said Vijay Marolia, co-founder of Cash Square.

Phil Alberstat, managing director of Embarc Advisors, suggests that despite the headwinds, the Skydance deal could still move forward through acquisitions. “National Amusements could decide to sell its shares, in whole or in part, to a third party, such as Skydance, thus transferring control of Paramount”these.

Are there other interested parties?

Despite advanced negotiations, Gabelli’s co-CIO expresses confidence in Paramount’s ability to recover independently if necessary. “We are not tied to the idea of ​​a sale. Pursuing as an independent entity with an accelerated transformation plan will likely generate greater economic benefit for all shareholders in the future“, he added, also mentioning that it would not be surprising to see interest from other strategic and financial buyers in Paramount.

Alberstat, from Embarc Advisors, also believes that, if Skydance is unable to complete the deal, it is likely that another interested party will appear. “There are potential bidders waiting to see if Skydance can close the deal during the 30-day exclusive negotiation period.”these.

Vijay Marolia suggests that renowned investors like Bill Ackman or Daniel Loeb could emerge as saviors at any time.

David Katz, from Matrix Advisors, says that large technology companies interested in the entertainment sector are paying attention to the process. “A complete and transparent sales process should be carried out to attract interest from all potential bidders, without excluding anyone due to preconceptions about possible regulatory objections, which can be resolved. This includes tech giants like Apple, Amazon and Alphabet, as well as other streaming providers.”concluded Katz.

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With information from Investing Brasil.