New month, new survey
Hot topics, market risks and rate forecasts ahead of Jerome Powell’s testimony before Congress. Stay ahead of the curve by taking Breakfast on Wall StreetJuly sentiment survey, which can provide a forward-looking outlook for your portfolio.
Take the survey here and don’t forget to share your thoughts in the WSB comments section.
Content is king
A new chapter is opening for Paramount Global after several twists and turns that ultimately led it to agree to a merger with David Ellison’s Skydance Media. A complex transaction (see details below), but one that could breathe new life into a Hollywood icon that wiped about 70% of its stock value after the Viacom-CBS merger in 2019. The company was later renamed Paramount Global, but has since struggled with cash flow issues with its streaming business (Paramount+), suffered a decline in linear TV (CBS and MTV) and had S&P Global downgrade its debt to junk status.
Instant: Sony Pictures (SONY) and Apollo (APO) have also had their sights set on the company, as has IAC Chairman Barry Diller. There have been serious tensions along the way, leading to the ouster in April of Paramount CEO Bob Bakish, who was quickly replaced by an “Office of the CEO” led by three division heads. However, the upcoming deal will bring together the old and new Hollywood, with the end of the Redstone dynasty and the rise of the Ellison era after big hits like Top Gun: Maverick and the ReacherParamount and Skydance have even worked together in the past, co-producing films in the Terminator, Transformers, And Impossible mission franchises.
“Given the changes occurring in the industry, we want to strengthen Paramount for the future while ensuring that content remains king,” said Shari Redstone, echoing the call of her father and family patriarch, Sumner Redstone. “We are hopeful that the transaction with Skydance will position Paramount to continue to succeed in this rapidly changing environment. As a long-time production partner of Paramount, Skydance knows Paramount well and has a clear strategic vision and the resources to take it to its next stage of growth. We believe in Paramount and always will.”
Fine print: The two-step deal would first see Skydance and its partners acquire National Amusements, which owns the Redstone family’s majority stake in Paramount, for $2.4 billion in cash. The next step would be to merge Skydance with Paramount, offering a total of $4.5 billion — or $23 in cash or stock for Class A voting stockholders (PARAA) and $15 for Class B non-voting stock (PARA) — as well as an additional $1.5 billion for Paramount’s balance sheet. Once the deal closes, Ellison will become CEO of the new Paramount, while former NBCUniversal CEO Jeff Shell (now at Skydance investor RedBird Capital) will run day-to-day operations as chairman. The deal also gives Paramount 45 days to find a competing offer, and it will likely take months to close in its current form while regulators review the merger. (16 comments)
Left, right and center
France is bracing for unprecedented political uncertainty as the New Popular Front unexpectedly won the legislative elections, securing more seats than President Emmanuel Macron’s Ensemble alliance and Marine Le Pen’s National Rally. But with no party winning a majority, modern France will see its first parliament without a dominant party. Traders appear to have downplayed the uncertainty as the CAC 40 (CAC:IND) reversed earlier losses to rise almost 1%. With the three groups having very different agendas on issues ranging from taxes to immigration, it is unclear how they will go about forming a government. (15 comments)
Beverage giant
Third time’s the charm. London-listed soft drinks maker Britvic (OTCQX:BTVCF) has agreed to be acquired by Danish brewer Carlsberg (CABGY), creating a drinks giant “with a strong platform for continued success.” The deal will help Carlsberg diversify away from beer, with an expansion into soft drinks. The sweetened takeover bid was valued at £3.28 billion ($4.2 billion) after Britvic rejected two earlier offers as too low. The new combination will also involve PepsiCo (PEP), given its long-standing agreements with Britvic for production and sales in the U.K. (1 comment)
Criminal Aircraft Builder
Boeing (BA) has agreed to plead guilty to a criminal conspiracy to defraud the U.S. government charge after the Justice Department found it violated an agreement over two fatal 737 MAX crashes in 2018-19. The planemaker will pay the maximum fine for the offense, $487.2 million, and must spend $455 million to strengthen its compliance and safety programs. Victims’ families said the plea deal, which will avoid trial, does not hold Boeing responsible for the deaths of 346 people killed in the crashes. Legal experts also believe the guilty plea may not affect Boeing’s defense contracts because the Pentagon is heavily reliant on the company. (9 comments)
