The New York City pension funds have filed a class-action lawsuit seeking to pause Paramount’s proposed merger with Skydance Media. The suit alleges that Paramount failed to adequately consider a superior $13.5 billion offer from Project Rise Partners. The lawsuit names Barbara Byrne, Linda Griego, Judith McHale, and Susan Schuman of Paramount’s special committee as defendants.
They are accused of breaching their fiduciary duty by not properly evaluating Project Rise Partners’ proposal. Project Rise Partners has offered to acquire Paramount’s Class B shares for $19 per share, more than the $15 per share in the Skydance offer, and Class A shares for $23 per share, the same as the Skydance offer. The bid also includes up to $5 billion in debt restructuring, an addition of $2 billion to Paramount’s balance sheet, and granting B shareholders 51% equity in the company.
Paramount’s special committee stated that Project Rise Partners did not present an official proposal during the Skydance deal’s 45-day go-shop period or the 7-month sale process. They cited a binding agreement with Skydance Media that precludes engagement with Project Rise Partners. The NYC pension funds’ lawsuit is one of several legal actions by Paramount shareholders challenging the deal.
Pension funds seek to block merger
The Employees’ Retirement System of Rhode Island was granted permission to review documents related to the merger, alleging potential wrongdoing by Shari Redstone and her holding company, National Amusements. Mario Gabelli, the second-largest Class A Paramount shareholder behind Redstone, has also filed to investigate the transaction’s details.
Gabelli claims there is a “credible basis” to believe fiduciary duties may have been breached. LiveVideo.AI Corp has filed a separate lawsuit in the Southern District of New York, alleging its offer to purchase Paramount was not fairly considered. The Paramount-Skydance deal is scheduled to close in the first half of 2025, but ongoing litigation could delay or prevent the transaction.
The deal also requires approval from the FCC due to the transfer of broadcast licenses. If the transaction is not finalized by April 7, with potential for two automatic 90-day extensions, or if regulatory bodies block the merger, both Paramount and Skydance have the option to terminate the agreement. This would obligate Paramount to pay Skydance a $400 million breakup fee.
The controversy surrounding the deal highlights the complexities involved in major corporate mergers, particularly in the media sector where strategic control and financial interests are heavily scrutinized.
