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Some Paramount Global PARA-Q investors are speaking out about a possible merger with Skydance Media, calling on the U.S. media conglomerate to look at other options and to treat shareholders equitably if this deal should be inked.

Skydance, the studio that partnered with Paramount Pictures on such hits as Top Gun: Maverick, has been conducting exclusive talks with Paramount Global, the entertainment giant controlled by Shari Redstone.

Not all shareholders are enthusiastic.

One long-term shareholder on Thursday voiced concerns about investors getting a “raw deal,” while another, Ariel Investments, is pushing for a more thorough review of all alternatives, arguing shareholders would benefit, according to the firm’s spokesperson.

Paramount did not respond to requests for comment.

Paramount entered into a 30-day exclusive negotiating period with Skydance, as a special committee of the board evaluates the possible acquisition of the smaller independent studio in a stock deal worth $4-billion to $5-billion.

Skydance is negotiating separately to acquire National Amusements, a company that holds the Redstone family’s controlling interest in Paramount, according to a person familiar with the deal terms. That transaction is contingent upon a Skydance-Paramount merger.

Exclusive talks between the two parties began days after private equity firm Apollo Global Management submitted a $26 billion all-cash offer for Paramount Global that was described by two people familiar with the offer as “extremely preliminary.” Paramount’s enterprise value at the end of 2023 was about $22.5 billion.

“Any merger talks that forego competitive bidding in favour of an exclusive discussion with a single buyer, particularly where the reported control premium differentiates the financial position of a single shareholder over all other shareholders, is averse to the fair market value of a company,” Ariel said in a statement.

At the end of December, Ariel owned a 1.8% stake in Paramount, making it one of the company’s biggest investors.

Deal talks between Skydance and Paramount have advanced to due diligence, which begins next week, sources said.

For some investors, a possible deal with Skydance raises other questions, namely how they would be treated compared with Redstone, whose family controls 77% of Paramount’s Class A voting shares, according to LSEG.

Billionaire investor Mario Gabelli told Reuters he expects the investors who own the remaining 10 million voting shares to be treated equally. Gabelli Funds owns 11.76% of Class A voting shares of Paramount, according to LSEG.

“If Shari sells voting stock and my clients don’t get it, I have no choice but to sue,” Gabelli said on Thursday, referring to any premium paid for the voting shares.

Meanwhile, four independent members of Paramount Global’s board will step down at the company’s annual shareholder meeting on June 4. Former Spotify chief content officer Dawn Ostroff, former Sony Entertainment President Nicole Seligman, Redstone attorney Robert Klieger and investment banker Frederick O. Terrell will leave, as the board shrinks from 11 members to seven.

One source described the departures as planned, as Paramount streamlines its board to create a smaller, more nimble group. Other sources said they see the exits as a sign that these independent directors do not want to be caught in the middle of a deal that may attract lawsuits if outside investors believe Redstone benefited from the transaction at the expense of Paramount shareholders.

None of the exiting board members could be reached for comment.

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