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Paramount (NASDAQ:PARA): Looking for a New Suitor for Publishing Unit

Story Highlights

Paramount Global is looking for a new buyer for its publishing unit as deal talks with Penguin Random House fall apart on antitrust grounds.

Media company Paramount Global (NASDAQ:PARA) has reportedly dropped plans to appeal a court’s ruling that prevented the sale of its book publishing business, Simon & Schuster, to Penguin Random House. As a result of the deal’s failure, Paramount is now looking for another potential buyer for its unit.

On October 31, District Court Judge Florence Pan voted against the $2.2 billion-worth deal, as she believes that the combination of two major industry publishers would significantly affect competition. Interestingly, last November, the U.S. Justice Department sued to block the deal on antitrust issues, along with the argument that it would impact the authors’ bargaining power.

The contract is set to end today, and as a result of the unsuccessful negotiations, Penguin is required to pay $200 million to Paramount as deal termination fees.

Also, having faced so many legal roadblocks, Paramount is unlikely to entertain offers from other publishing houses that might want to put their hands on this buying opportunity.

Is Paramount a Buy, Hold, or Sell Stock?

Paramount stock has a Hold consensus rating based on five Buy, five Hold, and seven Sell recommendations. The average stock price target of $19.69 implies 5.52% upside potential.

In contrast to the analysts, our data shows that hedge funds bought 13.6 million shares of PARA last quarter. Generally, hedge funds bulking up stocks is considered a positive sign. On another positive note, retail investors are bullish on the stock.

Further, PARA scores a 9 out of 10 on TipRanks’ Smart Score rating system, suggesting that the stock is likely to outperform market averages.

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