A Delaware judge ruled that Paramount Global’s $8 billion merger with Skydance Media can move forward — but still left the door open for a last-minute, rival bid that insiders say could derail the deal.
Kathaleen McCormick, the chief judge of Delaware’s Chancery Court, denied a request by New York City’s pension funds to block the deal with a temporary restraining order in order to open up a bidding war between Skydance and an investor consortium called Project Rise Partners, which has offered $8.8 billion for the media giant.
The judge gave the pension funds permission to conduct discovery in the case and renew their motion to block the deal.
She also ordered Paramount’s board to give the funds advance notice of a closing date, “optimally of no less than five business days.”
The deal is slated to close as soon as March 20.
“It is a colorable claim that Redstone breached her fiduciary duties to Paramount’s stockholders,” McCormick said, according to Bloomberg. “It is also a colorable claim that the Skydance parties knowingly participated in these breaches.”
In legal terms, a colorable claim means one that is reasonable.
“It’s not a bad result for Skydance,” a source said, adding that the judge will take time to review all the materials before deciding. “The judge wants a locked and loaded deal. She’s a thorough judge.”
Still, the ruling gives the plaintiffs time to build their case that Project Rise Partners, and perhaps other suitors, should be able to present competing proposals to the Paramount Special Committee.
The plaintiffs now also can subpoena a whistleblower as well as minutes of meetings held by the Paramount Special Committee that is conducting negotiations.
Meanwhile, the Federal Communications Commission is investigating allegations of political bias at Paramount’s CBS News over a “60 Minutes” interview with former Vice President Kamala Harris.
Charles Gasparino reported exclusively last week that the FCC’s decision could drag out until the summer.
Separately, President Trump has entered mediation talks with Paramount about settling his $20 billion suit alleging media bias during the election. The result of those mediation talks could impact the FCC, sources said.
Judge McCormick would likely need to be comfortable that there was a credible alternative bid before actually blocking the $8 billion Skydance-Paramount merger.
Early last month, New York City’s public pension funds sued to block the Skydance merger agreement, whose exclusive terms have prevented Paramount from considering any rival bid including consortium Project Rise’s higher $8.8 billion offer.
The Paramount board allegedly did not seriously consider Project Rise’s bid during the auction process, the suit says.
“The plaintiffs made zero effort at the hearing to defend the credibility of Project Rise. Not a word about it,” a source close to the case said.
The New York City pensions allege Skydance is buying media heiress Shari Redstone’s controlling stake in Paramount at a much higher premium than it is paying common stockholders and that common shareholders were left out of the process without a vote.
Judge McCormick last year famously smacked down Elon Musk’s $56 billion pay package from Tesla’s board.
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