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Paramount Global's $8 billion merger with Skydance Media has cleared a major legal hurdle but remains vulnerable to a competing bid.

A Delaware judge ruled against blocking the deal with a temporary restraining order but left room for further legal challenges and rival offers.

According to the NY Post, Chancellor Kathaleen McCormick of Delaware's Chancery Court denied the request by New York City's pension funds, which sought to halt the merger to allow a bidding war.

However, she allowed the plaintiffs to continue their case and subpoena key records from Paramount's board.

The court also mandated that the pension funds receive at least five business days' notice before the deal closes, providing a potential window for intervention.

The ruling arrives amid an escalating dispute over Paramount's handling of the merger process. The New York pension funds argue that Paramount failed to properly consider an $8.8 billion bid from Project Rise Partners, which they claim offers better terms than the Skydance agreement.

"The plaintiffs made zero effort at the hearing to defend the credibility of Project Rise. Not a word about it," said a source familiar with the proceedings.

Shareholders Challenge Paramount Merger, Citing Favoritism Toward Redstone

Despite this, the plaintiffs maintain that Skydance's bid unfairly benefits Shari Redstone, Paramount's controlling shareholder, while sidelining common stockholders.

Legal experts suggest McCormick is unlikely to block the Skydance deal unless a credible alternative bid emerges.

Paramount's special committee has so far remained committed to the Skydance transaction, which is slated to close as soon as March 20, pending regulatory approvals, TheWrap said.

In parallel, Paramount is facing additional legal challenges. The Employees' Retirement System of Rhode Island has secured access to company records to investigate potential misconduct related to the merger.

Meanwhile, prominent investor Mario Gabelli has filed a separate lawsuit, alleging that Redstone and other executives breached their fiduciary duties by prioritizing Skydance's bid.

Further complicating the landscape, the Federal Communications Commission (FCC) is investigating allegations of political bias at Paramount's CBS News.

The outcome of this probe could influence regulatory approval for the merger, potentially delaying the finalization of the deal beyond the projected April 7 deadline.

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