Is Paramount Global heading for a bidding war?
Is Paramount Global heading for a bidding war?
The company could see its merger with Skydance halted by a court order, opening the door to chaos.
Every day, it seems as if there are more problems popping up for the merger of Paramount Global and Skydance Media. The merger faces multiple lawsuits, a review by the FCC that could be fraught with political implications, and plenty of skepticism from the market at large. On Monday, one of those lawsuits potentially opened the door for the transaction to fall apart completely. A ruling from Chancellor Kathaleen McCormick of the Delaware Chancery Court could send Paramount into a bidding war if all the dominos fall the right way.
Key Details:
- Judge McCormick asked pension funds from New York City for more information regarding their suit.
- The ruling could be a sign that the court plans to pause the Paramount and Skydance merger.
- At issue is whether a recent offer from Project Rise Partners to buy Paramount was legitimate.
On Monday, Judge McCormick asked for more information from a group of New York City employee pension funds that are suing to pause the merger between Paramount and Skydance. The funds allege that Paramount has not sufficiently considered Class B shareholders throughout the merger process, and that it did not consider a new offer from a group called Project Rise Partners to buy the company as it was obligated to do.
The request for more information by Judge McCormick is seen as an indication that she’s very seriously considering ruling against Paramount.
“If you are delaying a decision it’s bad for the people who did not bring the case,” a source following the case told The New York Post. “Paramount probably has real problems in court.”
According to one law school professor, the judge is most likely looking for more information as to whether the offer from Project Rise Partners is legitimate. The $13.5 billion bid would reward Class B Paramount shareholders more handsomely than Skydance’s offer would, but Paramount refused to consider it when it was received, saying it came in far after the 45-day “go-shop” window built into the Skydance deal.
If the merger is paused, it could open the door to more bids for Paramount. The Post reports that Edgar Bronfman Jr., who made an effort to buy Paramount in summer 2024 but ultimately withdrew his bid, could be seeking new financing to make another run at the company.
The FCC is also not moving quickly on its review of the Paramount/Skydance merger, a decision that could have ties to President Trump’s ongoing lawsuit against CBS. In short, the merger faces mounting pressure from all sides, and Monday’s ruling from Judge McCormick is just the latest setback for the transaction.
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