Mario Gabelli, a long-time shareholder of Paramount and its predecessor companies, is demanding greater transparency regarding the upcoming merger with Skydance. His primary issue revolves around a lack of detailed financial information and uncertainty surrounding the valuation of National Amusements, Inc.
The merger between Skydance and Paramount involves an intricate two-step process. Skydance and its supporters are investing $8 billion in total to first acquire control of NAI and subsequently merge with Paramount. The valuation places Skydance at $4.75 billion, including a $2.4 billion cash purchase of National Amusements. The anticipated closing date is set for the third quarter of 2025.
Gabelli’s efforts to gain more insight into the transaction have escalated into potential legal action. Despite no official mention of a lawsuit, reports suggest legal maneuvers to obtain additional information. While a complaint was reportedly submitted in Delaware Chancery Court, as of Friday night, no filing appeared on the court docket. Gabelli has communicated with Paramount’s general counsel to request further details, although no formal legal action has been cited.
One of the core issues highlighted by Gabelli is Paramount’s dual-class stock structure. NAI, controlled by Shari Redstone, holds nearly 80% of the company’s Class A shares, granting significant voting power. Class B shareholders, including Gabelli, fear being at a disadvantage in an M&A deal due to this structure. Gabelli Funds own a substantial amount of Class A voting shares in Paramount, further amplifying the investor’s concerns.
Skydance’s offer is a result of multiple negotiations, incorporating various incentives to appeal to Class B shareholders and minimize the likelihood of legal disputes. Indemnification against lawsuits played a pivotal role in reshaping the deal, a factor that led Redstone to back out of a previous proposal in June. The need for disclosure regarding the price paid to NAI for non-voting and voting shares has been emphasized by Gabelli in his communications.
The pursuit for detailed information is not a solitary endeavor, as other entities have voiced similar concerns. Last May, the Employees’ Retirement System of Rhode Island filed a complaint akin to Gabelli’s, seeking legal intervention to compel the release of pertinent documents related to the merger.
The quest for transparency and clarity in Paramount’s merger with Skydance underscores the importance of comprehensive information disclosure in major corporate transactions. Investors, like Mario Gabelli, play a crucial role in upholding accountability and diligence in the realm of mergers and acquisitions, safeguarding the interests of shareholders and ensuring transparency in business dealings.
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