Paramount faces new lawsuit which aims to pause Skydance merger
Paramount faces new lawsuit which aims to pause Skydance merger
The suit is being brought by five different New York City employee pension funds, which say Paramount did not properly consider a new buyout offer.
Paramount’s legal division is stacking billable hours, these days. The company faces multiple legal challenges to its merger deal with Skydance Media, and another lawsuit has arisen to try and halt the transaction in its tracks. The Wrap reports that Paramount is being sued by five pension funds representing New York City employees, who want to pause the Skydance merger until Paramount has sufficiently reviewed a $13.5 billion offer from Project Rise Partners (PRP) which arose in late January.
Key Details:
- The lawsuit says that Paramount failed in its duty to shareholders by not sufficiently considering the offer from Project Rise Partners.
- PRP’s bid pays Class B shareholders more than Skydance’s offer would but does not reward Paramount controlling shareholder Shari Redstone as richly.
- Paramount says it did not consider PRP’s proposal because it came well outside the 45-day “go-shop” period for considering alternatives to Skydance’s deal.
The suit is being brought by the New York City Employees Retirement System, the New York City Fire Department Pension Fund, the New York City Police Pension Fund, the New York City Board of Education Retirement System, and the Teachers’ Retirement System of the City of New York, all of which own Paramount stock in their portfolios.
In essence, they argue that Paramount failed in its duty to seek the best deal for shareholders by not properly considering PRP’s $13.5 billion bid. They want a court order blocking the closing of Paramount’s merger with Skydance until their case is considered.
The offer from Project Rise Partners pays Class B shareholders $4 per share more than the Skydance deal would and gives them 51% equity in the company. It’s an all-cash offer, but it does not include the bonuses and sweeteners for Paramount controlling shareholder Shari Redstone that are included in the Skydance bid.
“For Paramount’s public Class B stockholders, PRP’s offer is vastly superior to the unfair Merger being foisted upon them,” the lawsuit says. “But Redstone would be left worse off, no longer due to receive the NAI overpayment, Central Park apartment, private jet and $200 million indemnification that Skydance agreed to pay her. Any independent director should be duty-bound to consider it on the merits and in good faith. But Paramount’s special committee did not.”
Paramount stated publicly that it would not engage with the PRP offer just a few days after it was made. It argued that because the proposal came in well after the 45-day “go-shop” window that was built into Skydance’s bid, it was not under obligation to consider PRP’s offer.
New York City employees are not the only public servants who are pursuing legal action against Paramount. Recently, a pension fund representing Rhode Island employees was granted access to Paramount/Skydance merger documents on similar grounds that Paramount did not find the best possible deal for all shareholders.
The merger between Paramount and Skydance is quickly becoming a fiasco, and at this point, it’s not clear whether the transaction will make it across the finish line or not. There are a rising number of lawsuits for the companies to wade through first, and their deal might not survive all of them.
Paramount Plus
Paramount+ is a subscription video streaming service that includes on-demand access to 40,000+ TV show episodes from BET, CBS, Comedy Central, MTV, Nickelodeon, Nick Jr., and more. Get free access with a Walmart+ subscription.
Paramount+ includes “1883,” “Tulsa King,” “Star Trek: Discovery,” “SpongeBob SquarePants,” and “PAW Patrol.” Subscribers can watch the NFL, college football, The Masters, college basketball, UEFA Champions League, UEFA Europa League, Serie A, and NWSL. The service also offers the option to watch your live CBS affiliate. The upgraded ad-free package includes premium movies and shows from Showtime.