A Delaware judge has raised doubts about Paramount Global’s $8 billion merger with Hollywood’s Skydance Media by opening the door to a possible bidding war.
Delaware Chancellor Kathaleen McCormick asked New York City’s public pension funds, which sued to block the deal last month, for more information on Monday, suggesting she may be considering temporarily halting its closure. This could attract competing offers and cause the agreement to fall through, according to a report from The New York Post.
City firefighters, police officers, and teachers are represented by the pension funds, which claim that the Skydance transaction unfairly gives media billionaire Shari Redstone’s majority interest in Paramount priority, paying her more while excluding regular stockholders without a vote. They assert that because of the exclusivity terms of the merger, a competing offer of $8.8 billion—$800 million more than Skydance’s deal—from Project Rise Partners, an investment consortium headed by Daphna Ziman, was rejected. According to Ziman, who informed reporters that Paramount’s Special Committee declined to meet with her organization, “our original offer had a letter from Northern Trust verifying the financials.” Although Ziman has not made her backers publicly known, Project Rise Partners has submitted financial information to the court under secret.
Chancellor McCormick’s desire for additional details has stoked rumors that she may be willing to halt the Skydance agreement, which Paramount had thought would move forward immediately. Stakeholders are left in suspense after the court, who notably rejected Elon Musk’s $56 billion Tesla compensation plan last year, failed to schedule a fresh hearing.
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In addition, the lawsuit alleges that Skydance provided Redstone with extravagant benefits, such as reimbursement for her private aircraft lease and Central Park residence, and indemnified her from fiduciary duty allegations related to the merger. According to the plaintiffs, who say they have a whistleblower ready to testify about defects in the selling process, these accusations depict a deal that was slanted to favor Redstone at the detriment of other investors.
The Federal Communications Commission (FCC) is investigating the deal, which will only make Paramount’s problems worse. During Monday’s sessions, Judge McCormick asked the FCC about its timeframe. Paramount estimated that the earliest approval may occur by March 18; however, other sources indicate that the decision may take longer than expected to reach a decision. The regulatory conclusion may be affected by the fact that the FCC inquiry takes place at the same time that Paramount and President Trump are having separate mediation discussions regarding his $20 billion lawsuit alleging media bias during the election.
Other possible buyers, such as Apollo Global Management, have reportedly backed off as the legal battle progresses, while Edgar Bronfman Jr., who withdrew a bid last summer, is apparently looking for fresh investors. For the time being, Paramount’s future is uncertain, and McCormick’s next action could change the media landscape.
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