Paramount Global’s $8 billion merger with Skydance Media has faced a legal hurdle as a Delaware judge ruled in favor of allowing the deal to move forward but left room for a potential rival bid that could disrupt the agreement. New York City’s pension funds had sought to block the merger with a temporary restraining order in hopes of sparking a bidding war between Skydance and an investor consortium named Project Rise Partners, which had offered $8.8 billion for the media company.
Judge Kathaleen McCormick of Delaware’s Chancery Court denied the pension funds’ request for a restraining order but granted them permission to conduct discovery in the case and potentially renew their motion to block the deal in the future. She also mandated that Paramount’s board provide advance notice of the closing date to the funds, ideally with a lead time of at least five business days. The current target date for the deal to close is March 20.
In her ruling, Judge McCormick mentioned that there were reasonable claims that Paramount’s controlling stakeholder, Shari Redstone, may have breached her fiduciary duties to the company’s stockholders. She also noted that Skydance may have been complicit in these alleged breaches. The term “colorable claim” was used to describe the validity of these allegations.
Despite the judge’s decision to let the merger proceed, insiders believe that it gives the plaintiffs an opportunity to strengthen their case for other potential suitors like Project Rise Partners to present competing bids to the Paramount Special Committee. The plaintiffs now have the ability to subpoena a whistleblower and access minutes of meetings held by the committee during the negotiation process.
In addition to the legal challenges, the Federal Communications Commission is investigating claims of political bias at Paramount’s CBS News, particularly regarding a “60 Minutes” interview featuring former Vice President Kamala Harris. This inquiry could impact the timing of the merger closure, with reports suggesting that the FCC’s decision may not be reached until the summer.
Separately, mediation talks between President Trump and Paramount regarding a $20 billion lawsuit alleging media bias during the election could also influence the outcome of the merger. The potential involvement of credible alternative bids may be a key factor in determining whether the Skydance-Paramount merger will proceed as planned.
The lawsuit filed by New York City’s public pension funds alleges that Skydance’s exclusive terms in the merger agreement prevented Paramount from considering Project Rise’s higher bid. The plaintiffs claim that the Paramount board did not adequately evaluate Project Rise’s offer during the auction process, potentially disenfranchising common shareholders from having a say in the decision.
Overall, the legal battle surrounding the Paramount-Skydance merger highlights the complexities and challenges involved in major corporate deals. Judge McCormick’s ruling sets the stage for further developments in the case, with potential implications for the future of both companies involved.
