Weeks after Australia’s Network 10 and Paramount+ owner, Paramount Global, agreed to merge with David Ellison’s Skydance Media, that deal has now been challenged in court by one of Paramount’s shareholders.
The lawsuit filed by Scott Baker in Delaware’s Chancery Court on Wednesday claims that the deal will cost shareholders A$2.52 billion.
The lawsuit claims the merger’s primary purpose is to cash out media mogul Paramount Chair Shari Redstone’s investment in Paramount at a substantial premium, and contends that other investors will receive a significantly lower payout.
“That payout is only worth $12.23 (A$18.72) per Paramount Class B share. Thus, when the merger closes, the non-NAI Class B shareholders will suffer $1.65 billion (A$2.52 billion) in damages,” the lawsuit said.
The plaintiff claimed that the merger was unfair and disadvantageous to Paramount’s Class B stockholders, who will not receive a fair share of the benefits compared to Redstone and National Amusements, which owns a controlling stake in Paramount.
The deal will see Redstone sell her family’s National Amusements, which controls about 77 per cent of the voting stock in Paramount, for A$3.67 billion.
The Ellison family and RedBird Capital Partners will invest more than A$12.23 billion in the business, including A$2.29 billion to help pay down Paramount’s debt and A$6.88 billion to buy Paramount shares.
Baker’s lawsuit alleged that the latest deal was “history repeating itself,” pointing to the CBS-Viacom merger in 2019 that created Paramount Global.
That deal attracted lawsuits from investors who claimed that Redstone pressured CBS into an unfair merger.
