A Delaware judge has agreed to review claims in a class action lawsuit asserting that Paramount Global's $8 billion sale to Skydance Media should be halted, as it allegedly disadvantages public shareholders, per a court filing on Thursday.
Reuters reports the deal, orchestrated by Paramount's controlling shareholder Shari Redstone in July, involves a two-step process to sell her stake in the Hollywood studio to David Ellison's Skydance, a rising player in the streaming landscape. The transaction awaits regulatory approval to finalize.
In January, Project Rise Partners, an investor group, put forward a $13.5 billion bid to buy Paramount, which was turned down by a special committee of Paramount’s board. This prompted pension funds representing New York City employees, who hold Paramount stock, to file a lawsuit in Delaware’s Court of Chancery. The suit claims that Paramount’s special committee neglected its fiduciary responsibilities to public shareholders by dismissing the Project Rise Partners offer.
The judge in Delaware Chancery Court called for the case to be completed before FCC review of the merger finishes in early April. But on Thursday, Chancellor Kathaleen McCormick granted an expedited timeline for the pension funds’ lawsuit but rejected their request for a temporary restraining order to pause the deal, noting that closure did not seem imminent. In her eight-page decision, McCormick stated, “Although plaintiffs have shown sufficient harm to justify expedition, the harm does not appear immediate enough to require a TRO.” She mandated that Paramount and Skydance provide the pension funds with “optimally” five business days’ notice before closing, allowing the funds an opportunity to request a TRO if needed. Neither Paramount nor Skydance immediately commented on the matter.
The agreement with Skydance included a 45-day “go shop” window, ending August 21, during which Paramount could seek alternative bids. Should Paramount opt for another buyer, it would owe Skydance a $400 million termination fee. The board considered a rival proposal from media veteran Edgar Bronfman Jr., but his withdrawal paved the way for Skydance Media to assume control of Redstone’s media conglomerate.
In January, Project Rise Partners, an investor group, put forward a $13.5 billion bid to buy Paramount, which was turned down by a special committee of Paramount’s board. This prompted pension funds representing New York City employees, who hold Paramount stock, to file a lawsuit in Delaware’s Court of Chancery. The suit claims that Paramount’s special committee neglected its fiduciary responsibilities to public shareholders by dismissing the Project Rise Partners offer.
The agreement with Skydance included a 45-day “go shop” window, ending August 21, during which Paramount could seek alternative bids. Should Paramount opt for another buyer, it would owe Skydance a $400 million termination fee. The board considered a rival proposal from media veteran Edgar Bronfman Jr., but his withdrawal paved the way for Skydance Media to assume control of Redstone’s media conglomerate.
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