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Sony shares fall as bid for Paramount fuels financing problems

Shares of Sony Group fell the most in almost three months after its proposal to buy Paramount Global raised financing concerns.

The stock fell as much as 4.2% in Tokyo.

The Japanese electronics company and Apollo Global Management have made a $26 billion proposal to buy Paramount, which is weighing the offer, people with knowledge of the matter said.

“Although it is a joint offer, investors are concerned about Sony’s finances” as the deal size exceeds Sony’s cash holdings, said Yugo Tsuboi, chief strategist at Daiwa Securities. Once there is more clarity on how the deal will be financed, investors will start to look at the benefits, he said.

Sony holds about ¥1.5 trillion ($9.7 billion) in cash and cash equivalents, according to Bloomberg data. The Tokyo-based company is considering acquiring a majority stake in the new venture, with Apollo as an investor, the people said.

Sony shares have fallen more than 5% this year, compared with a 16% gain in the Topix index, amid a global electronics slump. The company lowered its expectations for sales of its PlayStation 5 gaming console in February.

“In addition to the impact of the acquisition on cash position and debt, questions have been raised about the CBS channel associated with Paramount, which foreigners cannot own, and given the political climate it appears the deal will be subject to major criticism ” the spokesperson said. Amir Anvarzadeh, a Singapore-based strategist at Assymetric Advisors, said: “Unless they find a buyer for CBS, the deal is unlikely to go through.”

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