Mario Gabelli, a long-time shareholder of Paramount and its precursor companies, is raising significant concerns regarding the pending merger between Paramount and Skydance. The merger, valued at $8 billion, involves a complex two-step transaction that first includes Skydance taking control of National Amusements, Inc. (NAI) before merging with Paramount. Gabelli is specifically pushing for more financial data and clarity on the valuation of NAI, urging for increased transparency into the deal.
Gabelli, a prominent investor and fund manager, took to Twitter to amplify his call for more information regarding the merger. He coined the term “Operation fish bowl” to symbolize this effort to gain more visibility into the transaction. Despite not explicitly mentioning a lawsuit, reports surfaced indicating that Gabelli had made legal moves in an attempt to extract additional details about the deal. While a complaint was rumored to have been submitted in Delaware Chancery Court, as per Friday night, there was no official filing in the court docket.
At the core of Gabelli’s concerns lies Paramount’s dual-class stock structure. NAI, led by Shari Redstone, holds nearly 80% of the company’s Class A, or voting, shares. This distribution has raised apprehensions among holders of Class B shares, like Gabelli, who fear being disadvantaged in an M&A agreement. The proposal from Skydance has been tweaked multiple times to make it more appealing to Class B shareholders and reduce the likelihood of legal disputes. Notably, indemnification against lawsuits has emerged as a crucial aspect of the negotiations, influencing Redstone’s decision to walk away from a prior offer in June.
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Gabelli emphasized the importance of disclosing the price paid to NAI for both the non-voting and voting shares as part of the merger deal. He likened his pursuit of information to that of security analysts who diligently research industry and company data. The push for transparency echoes a similar sentiment expressed by the Employees’ Retirement System of Rhode Island, which filed a complaint in May seeking court intervention to release pertinent documents related to the merger.
As the Paramount-Skydance merger unfolds, Mario Gabelli’s proactive stance in demanding more information sheds light on the significance of transparency in major corporate transactions. The investor’s meticulous efforts to gain clarity on the deal’s financial aspects reflect a broader need for accountability and disclosure in the business world. Paramount, Skydance, and other involved parties must heed these calls for increased transparency to ensure a smooth and equitable merger process.
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