Paramount Global’s (NASDAQ:PARA) majority shareholder, Shari Redstone, faces a critical choice regarding whether to involve other shareholders in a potential merger with producer David Ellison’s Skydance Media. Despite holding less than 10% of Paramount’s shares, the Redstones control 77% of the voting stock, raising concerns about shareholder participation in significant deals.
Recent legal precedent in Delaware, exemplified by a case involving Match Group Inc (NASDAQ:MTCH), emphasizes the importance of securing approval from independent directors and non-controlling shareholders for transactions benefiting controlling shareholders. This approval can mitigate shareholder litigation risks and ensure fairness.
While discussions for a merger involving Ellison’s acquisition of the Redstones’ holdings and integration of Skydance into Paramount continue, dissent among Paramount investors, including notable figures like Mario Gabelli and Barington Capital Group LP, highlights the need for a comprehensive approach benefiting all stakeholders.
The potential involvement of Sony Group Corp (NYSE:SONY) and Apollo Global Management Inc (NYSE:APO) in a joint bid for Paramount adds complexity, with Paramount’s shares already surging on the news.
As Redstone and Paramount’s board weigh the inclusion of nonvoting shareholders, past precedents at companies like News Corp (NASDAQ:NWSA) and Fox Corp (NASDAQ:FOX) underscore the importance of investor participation. However, historical instances, such as the CBS Corp. and Viacom Inc. recombination in 2019, suggest that nonvoting shareholders may not always have a voice in significant corporate actions.
As discussions unfold, Redstone’s dilemma highlights the complexities of dual-class stock structures and the need to balance shareholder interests in corporate decision-making.
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