This is how the American Apollo fund is betting on Paramount studios
American private equity firm Apollo has offered $11 billion for Paramount's Hollywood studios. The offer, worth more than Paramount Global's market capitalization, comes as the company weighs a merger with Skydance Media
Apollo makes a “can't refuse” offer for entertainment giant Paramount Global's Hollywood studios.
Private equity firm Apollo Global Management has offered to buy Paramount's film and TV studios for $11 billion, according to a Wall Street Journal report. The fund therefore offers more than Paramount Global's $7.7 billion market capitalization.
Paramount's studio division has long been in the crosshairs for the purchase, with video streaming leader Netflix among the companies that have expressed interest in the deal behind films like "Top Gun: Maverick," the Journal 's report adds. Additionally, the offer comes as an independent committee of the company's board is reviewing another bid by Skydance Media to merge with all of Paramount.
Just last month, Warner Bros. Discovery abandoned talks to potentially acquire Paramount Global, after months of negotiations. A mega-merger between the two entertainment giants would have created one of the largest media companies in the world.
Meanwhile, Paramount shares jumped nearly 12% after the Wall Street Journal reported Apollo's offer.
All the details.
APOLLO'S OFFER FOR PARAMOUNT STUDIOS
Apollo Global Management has made an $11 billion offer to acquire Paramount Pictures and the Paramount TV Studios group. So the proposal would not include CBS, Paramount Global's cable networks such as BET, Comedy Central, Nickelodeon and MTV, or the streaming business unit that includes Paramount Global's Paramount+ and Pluto TV.
As previously mentioned, Apollo's stated bid for Paramount studio assets is higher than the market capitalization of Paramount Global in its entirety ($7.3 billion as of March 19). The proposed transaction could include the assumption of Paramount Global's long-term debt (which stood at $14.6 billion at the end of 2023), notes Variety .
WHILE SALE TO SKYDANCE MEDIA IS DISCUSSED
However, according to the Financial Times , Shari Redstone, Paramount's chairman and controlling shareholder, is not convinced by Apollo's $11 billion offer for the Hollywood studio alone and is instead negotiating a rival deal with the independent producer David Ellison to secure the future of his family's media empire. His company Skydance Media, Paramount's partner on films such as Top Gun: Maverick, would then merge with the media group.
That transaction, however, is complex and other Paramount investors may object to the terms, Bloomberg reports. Company executives said at a March 6 investor conference that their goal is to “create value for all of our shareholders.”
THE CONSEQUENCES
The FT also points out that Paramount is behind some of the most legendary properties in entertainment, such as The Godfather, Star Trek, Titanic and Mission: Impossible. “But Paramount's stock is down more than 70% in the last two years. Investors are skeptical that the group can compete in a cutthroat streaming business in which it is battling against much larger groups such as Disney, Netflix and Amazon."
“Accepting a studio-only offer would mean separating the rest of the company from one of the key engines that drives it,” said MoffettNathanson analyst Robert Fishman. “Remove one of its unique content creators from the equation and the rest of the company could feel empty,” he added.
The sale of the studio alone would in fact be equivalent to the dissolution of Paramount Global. According to sources familiar with the negotiations, the Redstone family is not in favor of a piecemeal sale, as it believes it is more advantageous to keep the studios, networks and its Paramount+ TV streaming service together.
This is a machine translation from Italian language of a post published on Start Magazine at the URL https://www.startmag.it/economia/ecco-come-il-fondo-americano-apollo-punta-sugli-studi-paramount/ on Thu, 21 Mar 2024 11:07:52 +0000.