Paramount Shareholder Mario Gabelli Seeks ‘More Equitable Distribution’ of Shari Redstone’s Payout in Skydance Merger
A Delaware court recently ruled that the investor has a "credible basis to suspect wrongdoing” in the $8 billion deal The post Paramount Shareholder Mario Gabelli Seeks ‘More Equitable Distribution’ of Shari Redstone’s Payout in Skydance Merger appeared first on TheWrap.
Paramount shareholder Mario Gabelli says he will seek a “more equitable distribution” of Shari Restone’s payout in the $8 billion Skydance merger for the media giant’s voting shareholders.
Gabelli, who is the second largest Class A Paramount shareholder behind Redstone, believes that Paramount ascribed no value to any of National Amusement’s assets other than its Paramount stock in the deal with David Ellison’s studio, allowing her to receive “significantly greater value” than the $23 per share offered to other Class A shareholders.
He filed an initial books and records request last July, seeking to determine the exact value of Redstone and NAI’s shares. He would later file a formal complaint under a Section 220 demand after telling the Delaware court that Paramount had refused to produce certain electronic documents, including communications, that were deemed “critical” to his effort.
Following a trial, a judge from the Delaware Court of Chancery determined earlier this month that Gabelli’s Value 25 mutual fund “stated and proved a credible basis to suspect wrongdoing,” but stopped short of ordering Paramount to provide any additional documents. As of Jan. 31, Paramount produced nearly 6,000 pages of records for Gabelli’s initial request. As of March 19, he’d received nearly 10,000 of those documents, which included board and committee-level minutes and materials, director questionnaires and draft public filings. The production of documents remains ongoing.
“Justice Brandeis said it best: ‘Sunlight is the best disinfectant,’” Gamco Investors co-chief investment officer Chris Marangi said in a statement on Wednesday. “It has become clear that NAI directed the transaction to Skydance and in doing so secured additional compensation for their voting shares of Paramount that was not offered to other shareholders.”
Gabelli’s effort, dubbed Project Fishbowl, is being pursued on behalf of over 700 clients. A Paramount spokesperson declined to comment.
Other Paramount shareholders who have called out the deal include The Employees Retirement System of Rhode Island, who the Delaware Court ordered the media giant to turn documents over to for a similar investigation into potential corporate wrongdoing, Scott Baker, who has filed a proposed class-action lawsuit arguing the Skydance deal could cost shareholders $1.65 billion in damages, as well as the California State Teachers’ Retirement System (CalSTRS), which believes the damages could exceed that figure.
In addition to the books and records request, Gabelli has asked the FCC to pause its review of the transfer of broadcast licenses in connection with the transaction as his firm conducts its investigation into “potential fiduciary and/or federal securities violations.”
The Skydance deal has faced additional objections from The Center for American Rights, LiveVideoAi.Corp and Fuse Media, which Skydance has asked the FCC to dismiss, as well as Project Rise Partners, which has made an alternative offer of $13.5 billion to acquire Paramount. Skydance has said the latter’s bid is “belated” and “unserious” and contains “overwhelming evidence of fraud.”
Separately, President Donald Trump has called for CBS News’ broadcast license to be revoked and is suing the network for $20 billion over a “60 Minutes” interview with former Vice President Kamala Harris. CBS and Trump are in settlement talks and have reportedly agreed to a mediator.
The Skydance deal, which was initially set to close on April 7, has triggered its first automatic 90-day extension. If the deal is not closed by July 6, the deadline will be automatically pushed another 90 days to Oct. 4. After that, if the deal is still not closed, or if a regulator blocks the merger or one of the parties involved breaches the terms of the agreement, then Skydance and Paramount will have the option of terminating the deal. Exercising that option would leave Paramount on the hook to pay Skydance a $400 million breakup fee.
The post Paramount Shareholder Mario Gabelli Seeks ‘More Equitable Distribution’ of Shari Redstone’s Payout in Skydance Merger appeared first on TheWrap.
