Paramount (PARA) stock jumped as much as 15% on Friday following media reports that private equity firm Apollo Global Management is in discussions to acquire the media company through a joint buyout bid with Sony Pictures Entertainment. (Disclosure: Yahoo Finance is owned by Apollo Global Management.)

The development comes after Paramount reportedly declined Apollo's previous $26 billion all-cash offer, which included $14 billion worth of debt, for the entire company. It also reportedly declined a separate $11 billion bid for just the studio business from the firm.

"We view this as a positive development for all shareholders, including Shari Redstone," CFRA analyst Ken Leon wrote in reaction to the report. Redstone and her family control Paramount through the holding company National Amusements.

"Should there be a cash purchase for all PARA shares, it is likely that Apollo, as a US company, would take network assets (CBS and local TV station licenses), and Sony could hold equity in the non-FCC license assets (movies, television programs, and other)," he said.

Paramount declined to comment on the report. National Amusements, Sony, and Apollo did not immediately respond to Yahoo Finance's request.

Paramount is currently in exclusive merger talks with David Ellison's Skydance Media, according to a source familiar with the matter.

But shareholders have publicly expressed concerns over the terms of the deal, which critics say unfairly benefits Redstone. Some have even threatened to sue.

Amid the outcry, a proxy filing last week revealed four board members at Paramount will not seek reelection: Dawn Ostroff, Nicole Seligman, Frederick Terrell, and Rob Klieger.

Ostroff, Seligman, and Terrell currently serve on the board as independent directors tasked with evaluating potential bids. It is unclear if their departures will have an impact on ongoing Skydance talks.

'Averse to fair market value'

Skydance is reportedly aiming for a two-step deal targeting Paramount's holding company, National Amusements (NAI). Redstone currently serves as the president of NAI.

According to the Wall Street Journal, Redstone and Ellison have agreed to terms that would allow Skydance to purchase Redstone's controlling stake. Skydance would then merge its production studio with Paramount's — an important contingency to the deal, which must first be approved by an independent committee of directors at Paramount. It's unclear what Ellison plans to do with the rest of the company.

Skydance's purchase of Redstone's stake would result in a $2 billion cash windfall for the executive while investors with nonvoting shares would receive stock in the combined company (and a diluted shareholding).

National Amusements owns approximately 10% of Paramount's equity capital value and maintains 77% of voting shares — valued at around $1 billion.

"Any merger talks that forego competitive bidding in favor of an exclusive discussion with a single buyer, particularly where the reported control premium differentiates the financial position of a single shareholder over all other shareholders, is averse to the fair market value of a company," said Ariel Investments, a longtime shareholder of Paramount Global, in a statement earlier this month.

As of December 31, 2023, Ariel held a stake in the company of just under 2%.

Citi analyst Jason Bazinet further explained shareholder panic: "A lot of the details that have been talked about in the press with Skydance [include] Skydance buying NAI's shares and, essentially, getting control of Paramount without paying a premium to the public shareholders."

He said investors are more interested in an alternative bidder, which "presumably would pay all shareholders at a premium."

Paramount has been bleeding money in its streaming business. Although losses have narrowed, the company still reported a direct-to-consumer (DTC) loss of $490 million in the fourth quarter. It's also been plagued by plummeting linear TV revenue as more consumers cut the cord.

To combat the declines, Paramount has committed to various cost-efficiency plans, including layoffs, business restructurings, price hikes, and even a surprise dividend cut. But a potential sale has been on the table for months.

Alexandra Canal is a Senior Reporter at Yahoo Finance. Follow her on X @allie_canal, LinkedIn, and email her at [email protected].

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