Paramount Global has agreed to pay $122 million to resolve legal actions brought by shareholders regarding the merger of Viacom and CBS.

On Friday, Paramount Global announced that it will pay $122.5 million to settle lawsuits filed by shareholders of Viacom related to the company’s merger with CBS.

Paramount Global has reached an agreement to settle the ongoing class action lawsuit in the Delaware Court of Chancery. The settlement is subject to approval by the court. The lawsuit claimed that the company’s chairwoman, Shari Redstone, used “tyrannical” tactics to remove board members in order to facilitate the merger of Viacom and CBS. Additionally, the plaintiffs argued that the merger overvalued CBS stock and undervalued Viacom, resulting in financial harm to Viacom shareholders.

According to the lawsuit, Redstone’s appointed board members had conflicts of interest and did not act in the best interest of Viacom’s minority shareholders by not pursuing the best possible price for the company. The lawsuit claimed that during the initial discussions of the merger in 2018, Viacom was undervalued with an implied worth of $12.8 billion. Although the merger was unsuccessful at that time, the companies attempted it again a year later.

As per the lawsuit, by the time the merger was attempted again, Viacom’s financial position had improved. However, the exchange ratio proposed in the merger implied a value of only $11.8 billion, which was $1 billion less than what the company was valued at a year earlier.

Discovery had already begun and a trial was set to commence in July.

The California Public Employees’ Retirement System (CalPERS) is the primary plaintiff in the lawsuit. In 2020, a judge in Delaware combined four distinct lawsuits filed by Viacom shareholders into a single case.

In a statement released on Friday, Matthew Jacobs, the general counsel of CalPERS, stated that this case highlights the issues associated with dual-class share structures. Prior to the merger, Redstone controlled both CBS and Viacom through National Amusements Inc. Although owning only 10% of the economic interest in both companies, National Amusements Inc. held more than 80% of the voting power.

“CalPERS believes that this settlement — one of the largest class action settlements in Delaware history — confirms our decision to take action against controller overreach and to rectify the harm suffered by Viacom’s unaffiliated stockholders,” Jacobs said.

In December 2020, Joseph Slights, a former vice-chancellor, declined to dismiss the case, referring to it as one of the most fiercely disputed examples of alleged self-dealing by a controlling stockholder in recent times.

As per the securities filing, Paramount Global mentioned that it is still involved in a legal dispute with its insurers in Delaware Superior Court regarding coverage matters. The filing also stated that the settlement payment, the “vast majority” of which will be required to be paid no later than five days before the final settlement hearing.

In addition to the Viacom shareholder lawsuit settlement, Paramount Global is also facing a consolidated class action from CBS shareholders, which is currently pending in the Delaware Court of Chancery. The lawsuit challenges the merger and alleges that Joseph Ianniello, the former acting CEO of CBS, was offered a $125 million severance package to gain his support for the merger. The trial for this case is set to take place in June.

“We believe that the remaining claims are without merit and we intend to defend against them vigorously,” Paramount Global said in its annual report last month