Paramount shares rise on Sony and Apollo acquisition talks
Paramount Global (NYSE: PARA ) shares were up significantly today, rising over 9% in pre-market trading. The increase follows news that Sony Pictures Entertainment and Apollo Global Management (NYSE:APO) are discussing a joint venture to acquire the media conglomerate.
Paramount is currently in the midst of exclusive talks with Skydance Media, an independent production company led by David Ellison. But some shareholders are pressuring the company to consider alternative offers.
Previously, Apollo Global Management had submitted a $26 billion bid for Paramount and made a separate bid of $11 billion specifically for its movie studio division. The new joint offer with Sony Pictures is still in the works and aims to provide an all-cash offer for all outstanding shares of Paramount Global and potentially take the company private.
Under the proposed deal, Sony Pictures will acquire a majority stake and manage Paramount’s extensive film library. Apollo, on the other hand, is expected to gain control of the CBS broadcast network and affiliated local television stations.
Paramount’s stock performance has been under the spotlight, with a nearly 7% decline since April 3, when it was reported that the company had entered 30-day exclusive talks with Skydance. The last closing price of Paramount’s shares was $10.97, valuing the company at approximately $7.44 billion, according to LSEG data.
Since the merger in 2019 that created Paramount Global from CBS and Viacom, the company has experienced a significant decline in market value, losing over $16 billion. Paramount Global’s market capitalization fell below $10 billion as of January this year.
In light of recent developments surrounding Sony Pictures Entertainment’s interest in Paramount Global, it is worth examining Sony’s financial health and market position. Sony’s market capitalization stands at a robust $98.73 billion, and the company operates with moderate debt. This financial stability is highlighted by the fact that Sony has increased its dividend payments for 8 consecutive years and has demonstrated its commitment to shareholder returns by maintaining dividend payments for 45 consecutive years.
Examining Sony’s valuation metrics, it appears that the P/E ratio is currently at 18.04 and the adjusted P/E ratio for the trailing twelve months as of Q3 2024 is at 17.82, which represents a reasonable valuation compared to earnings. pointing out. However, the PEG ratio for the same period is -1.51, indicating that market expectations for future earnings growth may be negative or the company is undervalued relative to its growth potential.
From an operational perspective, Sony’s revenue growth was an impressive 28.91% over the last twelve months as of Q3 2024. This is a significant figure, especially considering that analysts are expecting a decline in sales in the current year. It’s also worth noting that Sony is a leading player in the Household Durables industry and has been profitable in the last twelve months, which could play a role in any potential acquisition strategy.