A Delaware Chancery Court judge has rebuffed a request by the five New York City pension funds to postpone a planned $8.4 billion takeover of Skydance Media by Paramount Global.
The pension funds, part of the $279.7 billion New York City Retirement Systems, wanted the court to issue a temporary restraining order against the deal, alleging that Paramount could have secured a better price from another suitor.
Kathleen St. Jude McCormick, chancellor in court, denied the request March 6 but didn’t foreclose a follow-up ruling depending on when the takeover is scheduled to occur. (The case is in Chancery Court because Paramount is a Delaware corporation even though its headquarters is in New York.)
“Although plaintiffs have demonstrated harm sufficient to support expedition, there does not seem harm proximate enough to warrant a TRO,” McCormick wrote.
“Defendants have not yet set a closing date given the uncertainties with the FCC process,” the judge wrote, referencing the need for the Federal Communications Commission to approve the deal.
“Defendants are ordered to give plaintiffs advance notice — optimally of no less than five business days — of the closing date once it is set so that plaintiffs can renew their motion for TRO if events warrant,” McCormick wrote.
Paramount has said the deal could close March 20 and that merger agreement with Skydance sets the date for April 7, the judge wrote.
“There is no certainty as to when the merger will close,” McCormick wrote because that depends on FCC approval. The closing date could be extended twice for 90 days each if the FCC hasn’t acted, she wrote.
The pension funds said the major beneficiary of the Skydance deal is Shari Redstone, the nonexecutive chair of Paramount and the controlling shareholder of the company.
"The losers? Paramount's public stockholders, who are being forced to accept a transaction that the market has universally derided and who have no ability to vote on the proposed merger," the pension funds’ original complaint said.
The lawsuit alleged that nonratable benefits — unique payments given to a controlling shareholder — to be paid by Skydance to Redstone include buying National Amusements for $2.4 billion, paying for her New York apartment and paying for the lease of her private jet, the pension funds' lawsuit said.
"Most egregiously, Skydance has agreed to indemnify Redstone for any breach of fiduciary claims arising out of the proposed merger," said the complaint in New York City Employee's Retirement System et al. vs. Barbara M. Byrne et al. Byrne is a Paramount director. Three other board members were named as defendants.
The lawsuit noted that a competing bidder, Project Rise Partners, sent an open letter to Paramount shareholders in October with an all-cash offering of $13.5 billion.
The special committee governing the merger rejected the offer "not because it was not economically superior but because of the agreement with Skydance," the lawsuit alleged.
