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Sony Group Corp.'s shares slid the most in almost three months after its proposal to buy Paramount Global raised financing concerns.
Macquarie Capital's Damian Thong said in a note to investors. "We do not think buying Paramount makes sense."
Sony holds about ¥1.5 trillion ($9.7 billion) in cash and cash equivalents, according to data compiled by Bloomberg. The Tokyo-based company is considering acquiring a majority stake in the new venture, with Apollo as an investor, the people have said.
While it's a joint offer, investors are worried about Sony's finances," given the deal size is larger than Sony's cash holdings, said Yugo Tsuboi, chief strategist at Daiwa Securities.
The deal represents a hefty premium for Paramount, based on the company’s $9 billion market capitalization and net debt of $12 billion, Macquarie Capital’s Damian Thong said in a note to investors. “We do not think buying Paramount makes sense.”
"Besides the impact of the acquisition on its cash position and debt, questions have risen regarding the CBS channel that comes with Paramount, which foreigners can't own, and given the political climate it seems that the deal will face major scrutiny," said Amir Anvarzadeh, a Singapore-based strategist at Asymmetric Advisors. "Unless they find a buyer for CBS the deal is unlikely to go through."