(Reuters) -A Paramount Global investor has sued to block its merger with Skydance Media, saying the deal would cost its shareholders $1.65 billion, according to a lawsuit filed in Delaware's Chancery Court on Wednesday.
David Ellison's Skydance Media bagged a deal to acquire Paramount early in July, ending months of discussion and speculation about the future of one of Hollywood's oldest studios.
The lawsuit, filed by Scott Baker, claims the merger's primary purpose is to cash out media mogul Shari Redstone's investment in Paramount at a substantial premium, while other stockholders will receive a significantly lower payout.
"That payout is only worth $12.23 per Paramount Class B share. Thus, when the merger closes, the non-NAI Class B shareholders will suffer $1.65 billion in damages," the lawsuit said.
The plaintiff alleged the merger was unfair and disadvantageous to Paramount's Class B stockholders, who will not receive a fair share of the benefits compared to Redstone and National Amusements Inc (NAI), which owns a controlling stake in Paramount.
NAI and Paramount Global did not immediately respond to requests for comment.
The lawsuit said the deal was "history repeating itself", pointing to the CBS-Viacom merger in 2019 that created Paramount Global. That deal had attracted lawsuits from investors who alleged that Redstone pressured CBS into an unfair merger.
The lawsuit filed on Wednesday could lead to more court challenges by investors against the merger, which was marked by executive shake-ups and rival bids.
Earlier this month, Reuters reported billionaire investor Mario Gabelli's investment firm was seeking more details about the valuation of National Amusements assets, signaling the firm may challenge the deal.