A Paramount Global shareholder is challenging the company's merger with Skydance Media and argues that it would cost other shareholders $1.65 billion.
The agreement between Paramount and its controlling shareholder Shari Redstone was made earlier this month. This was to sell the company to David Ellison's Skydance Media, which has two internal game studios.
Paramount and Skydance Merger
The deal, which is still pending, could serve as a catalyst to help Paramount increase its presence in the video game industry. Ellison is said to be a gamer himself who views video games as being on par with TV and film.
Recently, Paramount Games licensed rights to develop an "Avatar: The Last Airbender" game and is collaborating with an outside studio for a "Paranormal Activity" title.
Jeff Shell said that one of the major issues in the business is growth, noting that Skydance Media can help with this matter, according to Variety.
However, the recent lawsuit against the merger was filed in Delaware's Chancery Court on Wednesday, July 24, 2024.
Scott Baker was the one who filed the legal challenge and claims that the efforts' primary purpose was to cash out media mogul Redstone's investment in Paramount at a substantial premium.
The plaintiff was claiming that the payout is only worth $12.23 per Paramount Class B share and that when the merger closes, the non-NAI Class B shareholders will suffer massive financial loss, said Yahoo Finance.
A Legal Challenge of the Deal
Baker also said that the merger was unfair and disadvantageous to Paramount's Class B stockholders as they will not receive a fair share of the benefits compared to Redstone and NAI.
Neither NAI nor Paramount Global immediately responded to requests for comment regarding the lawsuit.
The legal challenge also notes that the pending deal was "history repeating itself," referencing the CBS-Viacom merger that happened in 2019.
That particular agreement, which created Paramount Global, attracted lawsuits from investors who alleged that Redstone pressured CBS into an unfair merger.
The Wednesday lawsuit could result in more court challenges by investors against the potential merger that was marked by executive shake-ups and rival bids.
The situation comes after a report earlier this month noted that billionaire Mario Gabelli's investment firm was seeking more information regarding the valuation of NAI assets, according to the New York Post.
The two internal game studios that Skydance Media has are Skydance Interactive, which was founded in 2016, and Skydance New Media, which is a AAA game studio founded in 2019.
