Paramount Global will pay $122.5 million to settle a lawsuit claiming the 2019 CBS-Viacom merger was unfair to shareholders, the company said in a filing Friday. The settlement is still subject to approval by Delaware’s Court of Chancery.
CalPERS, California’s state pension fund, was the lead plaintiff in the litigation, which also named Shari Redstone and the Redstone family’s National Amusements as defendants. The core allegation was that Shari Redstone pursued the merger to consolidate power and become a corporate magnate on par with her late father Summer Redstone.
Paramount has maintained that the merger was necessary to bolster the company’s position in streaming and allow it to spend more on content to compete with larger rivals.
Paramount CEO Bob Bakish was removed from the suit in the same December 2020 ruling that allowed the litigation to proceed. The lawsuit claimed that Viacom’s board accepted a lower price for the merger to secure Redstone’s governance priorities, including that the company would be led by Bakish and his executive team.
In that December 2020 ruling, Vice Chancellor Joseph Slights of the Delaware Chancery Court said it was reasonable to infer from the plaintiffs’ claims that the December 2019 merger was “not entirely fair,” and that Redstone used it “to consolidate her control of Viacom and CBS at the expense of the Viacom minority stockholders.”
In that same statement, Slights noted that “plaintiffs allege that the willingness of the fiduciaries who served on Viacom’s transaction committee to allow Ms. Redstone to dominate their decision-making rendered them servile tools in Ms. Redstone’s relentless pursuit of a Viacom/CBS combination to advance her interests.”
Slights added, in another decision in January 2021 affirming CBS shareholders’ ability to sue, that the claims “allow a reasonable inference that CBS’s acquisition of Viacom was motivated not only by Ms. Redstone’s concerns about Viacom’s viability as a going concern but also her desire to shop NAI following their consolidation.”
Redstone pushed for the merger of the companies that her father had built over decades. Sumner Redstone died in August 2020 at 97.
The CBS-Viacom merger created a new company, led by Bakish, called ViacomCBS, with Redstone serving as non-executive chairman. The company last year renamed itself Paramount Global.
Paramount also notes that it is also in litigation with some of its insurers. It added that “pending recovery of any such insurance proceeds, the Company will advance funds for the settlement when they become due.”
Shares of Paramount Global closed the week at $22.59, down from $25.25 in early February.