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(Bloomberg) -- Money manager Mario Gabelli is asking a judge to make the film and TV company Paramount Global hand over files about its merger with Skydance Media so investors can tell what controlling stockholder Shari Redstone is getting in the deal and whether it’s fair.
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Gabelli, whose funds own about 12% of Paramount voting shares, says the company has refused to turn over records that would show whether Redstone’s gains, through the sale of her National Amusements Inc., improperly disadvantage Paramount’s minority shareholders based on Delaware corporate law.
“Skydance plans to purchase NAI’s controlling stake in Paramount for an enormous premium, siphoning value away from other shareholders,” according to a filing by a Gabelli fund in Delaware Chancery Court unsealed Jan. 6. Paramount and National Amusements “have offered no transparency into the valuation of NAI,” the filing said.
The document fight is one of several hurdles the parties need to clear before they can complete the deal, including federal regulatory approval for the transfer of broadcast licenses. They have said they hope to close as soon as the end of March or early April. The filing marks Gabelli’s latest demand for document production from Paramount — the owner of CBS, MTV and other media properties — which it has said is moving at a “glacial pace.”
To access internal company files in Delaware, shareholders must show a proper purpose for seeking the information. Such actions, known as books-and-records cases, are heard on an expedited basis and are sometimes the prelude to a lawsuit.
Gabelli is likely seeking to determine whether Redstone is getting an unfair indirect premium for her control of Paramount through National Amusements and how any premium was negotiated, said Larry Hamermesh, a retired University of Pennsylvania law professor who is an expert on Delaware corporate law.
Paramount and a representative for Redstone declined to comment on the filing.
The Deal
The dispute arose after Paramount agreed in July to merge with producer David Ellison’s Skydance. Ellison — the son of billionaire Larry Ellison, co-founder of software maker Oracle Corp. — is to become chief executive officer of Paramount.
The Ellison family and RedBird Capital Partners have agreed to invest more than $8 billion in the business. That includes $1.5 billion to help pay down Paramount’s debt, $4.5 billion to buy shares of Paramount, and the purchase of Redstone’s National Amusements. The deal puts National Amusements’ enterprise value at $2.4 billion, which includes $1.75 billion in equity, according to a company statement.