World Paramount revealed on Friday that it will pay $122.5 million to settle Viacom shareholder lawsuits stemming from the company’s merger with SCS.
In a securities filing, the company disclosed that it has agreed to settle the class action litigation currently pending in the Delaware Court of Chancery. The settlement still requires court approval.
Applicants had alleged this president of Paramount Global, Shari Redstone, ousted board members in a “tyrannical” effort to merge the two companies. The lawsuit alleged that CBS shares were overvalued in the merger and Viacom was undervalued, causing harm to Viacom shareholders.
The lawsuit alleged that Redstone’s hand-picked board members were conflicted and not seeking the best price on behalf of Viacom’s minority shareholders. When the merger was first considered in 2018, the lawsuit alleged that Viacom received an implied value of $12.8 billion. That effort fell apart, but the companies tried again a year later.
By then, according to the lawsuit, Viacom’s fortunes had improved, but the merger’s exchange rate implied a value of only $11.8 billion, or $1 billion less than it wasn’t worth a year earlier.
The discovery was underway and a trial was due to begin in July.
CalPERS, the state pension fund, is the lead plaintiff in the case. A Delaware judge consolidated four separate Viacom shareholder lawsuits into one in 2020.
Matthew Jacobs, general counsel for CalPERS, said in a statement Friday afternoon that the case highlights issues with dual-class share structures. Prior to the merger, Redstone controlled both Viacom and CBS through National Amusements Inc., which controlled over 80% of the voting rights in both companies despite owning only a 10% economic interest.
“CalPERS believes that this settlement – one of the largest class action settlements in Delaware history – confirms our decision to take action against monitor overreach and to repair the harm suffered by Viacom’s unaffiliated shareholders. “, said Jacobs.
In the securities filing, Paramount Global said the company is still fighting its insurers in Delaware Superior Court over coverage issues. According to the filing, the “vast majority” of the settlement payment will be due at least five days before the final settlement hearing.