Fund manager Mario Gabelli, the largest holder of Paramount Global Class A voting stock after Shari Redstone, said he absolutely needs more information on the Skydance transaction than has been publicly disclosed before deciding whether he likes it. the conditions.
On Friday, Gabelli sent a letter to Paramount seeking data to clarify the $2.4 billion that David Ellison’s company and its backers agreed to pay Redstone for her family company National Amusements under the announced merger agreement a week ago. NAI’s assets include about 80% of Paramount Global’s voting stock – giving the buyer control of the company – but also the National Amusements cinema chain and, possibly, other assets and investments. There was no defect in the notification of the agreement.
“We don’t know the details of how much she’s being paid for her voting control of Paramount,” Gabelli told Deadline today.
This is a problem because the terms of the merger require all outside Class A shareholders such as Gabelli and its hundreds of clients to tender their Class A shares for $23 each, or exchange each of their Class A shares for ownership for 1.53 shares of Class B non-voting stock.
“I’m not happy or unhappy,” Gabelli told Deadline. “I am focused only as a loyalist to do the best for my clients. If she [Redstone] get $40, and I get $23, that’s a problem. If she gets $26 and I get $23, eh, what’s $3 a share to them? … They’re not going to argue about $3 a share. Good? They’re going to make low bids and then have to deal with individuals like me who are going to arm wrestle.”
“I’m basically saying, look, tell us what Skydance paid for for the various parts of National Amusements? … That’s why I love books and records. Because I know Shari has invested in venture capital opportunities in the past, but I can’t tell if this is another pocket of her money, or if it’s part of National Amusements’ money. I just don’t know.”
Gabelli has been invested in Paramount Global and its various iterations for years and says he’s in it for the long haul and doesn’t like being forced to give up his Class A shares.
“We’re like marathon runners, okay. We want to keep our Paramount holdings. We wouldn’t want to be forced out of our holdings as they describe it… You guys take $23 or take 1.53 [Class B shares]. I dont like this. I want to see what she has. And then we can talk about what you want to pay me.”
“That’s something I don’t like either. They’re really trying to force me out of the position of having a perspective on the next phase of this transaction.”
A letter requesting records of board meetings and other information is permitted by the Delaware Court of Chancery, but does not itself constitute a lawsuit. Companies have five working days to respond.
“There’s a period of time in which they respond, but they can tell you, ‘We’re not going to give you anything.’ So then we’re going to have to go sue them. We’re not prepared for them done that. So if they come in and say, ‘I need a little more time,’ which is possible — I heard today, they could ask to extend the deadline until the end of July” — practically, he indicated, perhaps it’s okay.
He’s relatively okay with the Paramount-Skydance deal strategically in the sense that he believes Skydance adds scale and a push in technology and AI, and that content of all kinds has a bright future.
As for Class B shareholders, of whom there are far more than Class A, they are not happy with the deal, which offers them $15 per share for some of their stock. Their contention is that a second step in the transaction (after Skydance buys National Amusements) would see Paramount buy Skydance in a total deal worth $4.75 billion. Issuing new B shares would dilute current shareholders’ holdings and is why Paramount shares are trading between $11 and $12 — not $15. Some said they expect long-threatened lawsuits by Class B holders to begin to emerge.
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The original Skydance deal didn’t include any buyouts for Paramount shareholders beyond Redstone, but the offer was sweetened several times in an effort to get them on board.
The two sides agreed to a “go shop” provision until August 21 for any interested party to make a Paramount offer.