Paramount Shareholders Express Concerns Over Potential Skydance Media Merger: 'Any Merger Talks That Forego Competitive Bidding...Is Averse To The Fair Market Value Of A Company'

As Paramount Global PARA PARAA navigates through a potential merger with Skydance Media, investor concerns are surfacing regarding the deal’s fairness and the exploration of alternative options.

What Happened: Some investors of Paramount Global are voicing their unease over a potential merger with Skydance Media. Concerns focus on the deal’s fairness and the exploration of other options. Reuters reported on Thursday that not all shareholders support the potential $4 billion to $5 billion stock deal.

One long-standing shareholder expressed fears of investors receiving a “raw deal.” Meanwhile, Ariel Investments is advocating for a comprehensive review of alternatives, which they believe could be more beneficial for shareholders.

“Any merger talks that forego competitive bidding in favor of an exclusive discussion with a single buyer, particularly where the reported control premium differentiates the financial position of a single shareholder over all other shareholders, is averse to the fair market value of a company,” Ariel said in a statement.

Paramount has entered into a 30-day exclusive negotiation period with Skydance, while a special committee evaluates the acquisition. Concurrently, Skydance is negotiating to acquire National Amusements, which holds the Redstone family’s controlling interest in Paramount. This deal is dependent on the merger’s success.

These exclusive talks started shortly after Apollo Global Management proposed a $26 billion all-cash offer for Paramount Global, which was considered “extremely preliminary.” This offer came when Paramount’s enterprise value was approximately $22.5 billion at the end of 2023.

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As due diligence is set to begin next week, billionaire investor Mario Gabelli insists on equal treatment for all voting shareholders. Gabelli Funds, owning 11.76% of Class A voting shares, is prepared to take legal action if the Redstone family receives preferential treatment in the deal.

“If Shari [Redstone] sells voting stock and my clients don't get it, I have no choice but to sue,” Gabelli said.

Paramount is yet to respond to the queries sent by Benzinga.

Why It Matters: The potential merger has been a topic of intense discussion, with recent developments including the departure of four Paramount directors as negotiations with Skydance continue. This board shakeup, reported on Thursday, signals a significant shift in the company’s governance amidst the merger talks.

Earlier. it was reported that the deal could be a “home run” for Shari Redstone, while potentially being a loss for shareholders. This sentiment underscores the concerns of investors like Ariel Investments and Mario Gabelli, who are seeking a fair and equitable process.

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