Major Paramount Shareholder Sues to Get Closer Look at Company’s Finances Ahead of Merger
Investor Mario Gabelli represents clients owning millions of Paramount shares, and he’s not 100% satisfied with what he’s seen in the new merger deal.
Mario Gabelli isn’t ready to back off his hesitance about the Paramount Global and Skydance Media merger. The two companies have finally agreed on the terms of a deal that will see Skydance CEO David Ellison acquire National Amusements Inc., the holding company that controls most of Paramount’s “Class A” voting stock. Ellison will then merge Paramount and Skydance, but Gabelli — who’s firm represents the company’s second-largest stockholder — filed a lawsuit in Delaware court late last week, as he tries to determine if the deal represents the best value for his investment clients or not.
Key Details:
- Gabelli is suing to get a better look at Paramount’s books before the deal goes through.
- The investor first voiced his skepticism about the Skydance deal in late April.
- If Gabelli is unsatisfied with the data he receives, he could try to derail the merger entirely.
Gabelli’s suit in Delaware Chancery Court is in the name of looking more closely at Paramount’s finances to see if the deal is a fair one for all concerned. As an investor who represents clients holding millions of “Class B” non-voting shares, Gabelli told the New York Post last week that he wants to make sure that all of his clients are getting fair value from the deal.
“We look for value and how to get more for our clients,” Gabelli said. “We’ve been in the stock for years … all we want is transparency. This could be a great deal. I like what I see in terms of content but we want to see all the details. Suppose Shari got $35 a share for this thing? I got a million clients in the B shares, some of them own the A shares. Places like Vanguard and BlackRock don’t fight for their clients.”
That’s why Gabelli has gone through with his lawsuit. He’s been wary of the Skydance offer for months, and first made it known in April that he’d rather see Paramount go unsold than merge with Skydance under the terms of the deal that were publicly available at the time. The agreement has changed somewhat since; one important shift was the 45-day “go shop” period which allows Paramount to ensure no one else can offer its shareholders better value than Skydance. That will help indemnify the companies against lawsuits from shareholders who feel they didn’t get enough.
Could Gabelli Dismantle Skydance Deal?
Gabelli’s attempts to get a closer look at Paramount’s books could lead to another lawsuit challenging the deal itself, depending on what he sees when he cracks the books open. If he feels that the company didn’t try to get enough value for all of its shareholders, that outcome seems quite likely.
That could drag the merger process out for many more months, and it could see the deal fizzle out completely. Skydance has already laid out its future vision for Paramount, which includes $2 billion in cost reductions and a major overhaul of the Paramount+ streaming service, though as of now, it plans to keep the streamer, as well as the CBS television network. Not all assets will survive, however; Paramount is already in talks with the CEO of BET to sell that cable channel and its companion streamer BET+.
Everyone at Skydance is hopeful that Gabelli’s legal maneuvers won’t put their plans for Paramount on ice, but only time will answer that question now. RedBird Capital chief Gerry Cardinale, a key backer of Skydance wants to meet with Gabelli to try and assuage his fears, but that could get more difficult now that lawyers are officially involved.
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