(Bloomberg) — Shares of Sony Group Corp. fell the most in nearly three months after its proposed purchase of Paramount Global raised financing concerns.
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The stock fell as much as 4.2% in Tokyo. The Japanese electronics group and Apollo Global Management Inc. have made a proposal to buy Paramount for $26 billion, which is pricing the offer, people familiar with the matter said.
“Although it is a joint offering, investors are concerned about Sony’s finances,” given that the deal size is higher than Sony’s cash, said Yugo Tsuboi, chief strategist at Daiwa. Securities. Once the deal’s financing terms are clearer, investors will begin to look at the benefits, he said.
Sony holds about 1.5 trillion yen ($9.7 billion) in cash and cash equivalents, according to data compiled by Bloomberg. The Tokyo-based company plans to acquire a majority stake in the new venture, with Apollo as an investor, the sources said.
Sony shares have fallen more than 5% this year, compared with a 16% gain for the Topix index, amid a global electronics crisis. The company cut its sales forecast for the PlayStation 5 gaming console in February.
Sony’s deal for Paramount would bring additional regulatory scrutiny
“Aside from the acquisition’s impact on its cash flow and debt, questions have arisen regarding the CBS channel bundled with Paramount, which outsiders cannot own, and given the political climate, it appears the deal will come under increased scrutiny,” said Amir Anvarzadeh, a Singapore-based strategist at Ametric Advisors. “Unless they find a buyer for CBS, the deal is unlikely to go through.”
–With help from Winnie Hsu.
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