Paramount Global (PARA) stock saw a nearly 6% increase on Monday due to two significant developments hinting at potential M&A deals for the media giant.
First, the company discreetly disclosed in an 8-K filing on Friday that top executives such as CEO Bob Bakish, CFO Naveen Chopra, and executive VP Christa D’Alimonte would receive severance if terminated within two years following a change in control.
Additionally, the Saudi-backed Professional Fighters League (PFL) confirmed its acquisition of mixed martial arts promoter Bellator from Paramount on Monday. This acquisition follows Paramount’s announcement of the closure of its Showtime sports division, which included boxing and MMA.
According to reports, the acquisition may include PFL stocks, allowing Paramount to retain a minority ownership stake.
Wells Fargo analyst Steve Cahall noted, “PARA’s recent announcements on severance/change in control + Bellator sale adds to the M&A narrative” in a message to clients on Monday.
The relatively small market cap of around $9 billion makes Paramount a potential acquisition target, especially when compared to Disney’s $170 billion and Netflix’s $208 billion.
Cahall remained “skeptical there’s a more drastic change in strategy coming,” indicating that the possibility of M&A deals is not guaranteed, even with the positive changes in severance terms.
He added, “It’s all up to Chairwoman and controlling shareholder Shari Redstone. PARA is willing to part with non-strategic assets, but we don’t see it parting from major assets like CBS, Studios, etc.”
Cahall also emphasized that a profitable direct-to-consumer (DTC) streaming business could change the company’s outlook. Paramount’s DTC losses in the prior quarter were narrower than expected and are forecasted to decrease further.
However, the road to profitability in streaming remains uncertain, with companies like Netflix and Warner Bros. Discovery leading the way.
Paramount has been actively divesting non-core assets to reduce debt and improve its balance sheet. It recently completed the sale of Simon & Schuster to investment firm KKR in a $1.62 billion, all-cash deal.
Looking ahead, Paramount’s strong asset portfolio indicates potential for more M&A activities, with Showtime and BET Media Group being rumored for potential sales.
Alexandra Canal is a Senior Reporter at Yahoo Finance. Follow her on Twitter @allie_canal, LinkedIn, and email her at [email protected].
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