Paramount Global’s (NASDAQ:PARA)controlling shareholder, Shari Redstone, faces a pivotal decision regarding whether to grant other shareholders a say in a potential merger with producer David Ellison’s Skydance Media. While the Redstones hold less than 10% of Paramount’s shares, they wield 77% of the voting stock, raising questions about investor involvement in significant transactions.
Delaware’s recent legal precedent, highlighted in a Match Group Inc(NASDAQ:MTCH). case, emphasizes the necessity for deals benefiting controlling shareholders to garner approval from independent directors and non-controlling shareholders. Such approval can mitigate the risk of shareholder litigation and ensure fairness in transactions.
Although discussions for a merger involving Ellison’s acquisition of the Redstones’ holdings and subsequent integration of Skydance into Paramount are ongoing, dissent among Paramount investors, including notable figures like Mario Gabelli and Barington Capital Group LP, underscores 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 to the situation, with Paramount’s shares already surging on the news.
While the Redstones and Paramount’s board contemplate the inclusion of nonvoting shareholders in the decision-making process, past precedents at companies like News Corp(NASDAQ:NWSA). and Fox Corp(NASDAQ:FOX). highlight the importance of investor participation in major transactions. However, historical instances, such as the CBS Corp. and Viacom Inc. recombination in 2019, suggest that nonvoting shareholders may not always be granted a voice in significant corporate actions.
As discussions unfold, the looming dilemma for Redstone underscores the inherent complexities of dual-class stock structures and the need to balance shareholder interests in corporate decision-making processes.
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