Sony Group¡¯s shares slid the most in almost three months after its proposal to buy Paramount Global raised financing concerns.
The stock dropped by as much as 4.2% in Tokyo.
The Japanese electronics company and Apollo Global Management made a $26 billion proposal to buy Paramount, which is weighing the offer, people with knowledge of the matter 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. Once there¡¯s more clarity on how the deal will be financed, investors will begin to look at the benefits, he said.
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.
Sony¡¯s shares have dropped by more than 5% this year, compared with a 16% gain in the Topix index, amid a global electronics slump. The company in February cut its projections for sales of its PlayStation 5 gaming console.
¡°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.¡±
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