PSKY-WBD $110B Merger To Close In ‘Approximately Two Weeks,’ Says CEO After Settlement With State Prosecutors

• The deal had been delayed since July, when California Attorney General Rob Bonta led a coalition of 12 states, joined by the Writers Guild, in lawsuits arguing the combination would reduce competition and harm consumers.
• The state prosecutors and the company reached a settlement earlier on Monday. 
• The settlement reduces the risk of Paramount having to pay WBD shareholders daily late fees of $7 million starting Oct. 1.  

Paramount Skydance (PSKY) CEO David Ellison reportedly told his staff that the company is tentatively planning to close its $110 billion purchase of Warner Bros. Discovery (WBD) in about two weeks.

In a Monday memo obtained by Business Insider, Ellison said settlements with 12 state attorneys general and the Writers Guild of America had given the company “complete clearance for this merger and can move toward closing.” He added that “there’s still work ahead to get this deal across the finish line.”

The combined company would house Paramount Pictures, the Warner Bros. studio, CBS, HBO, HBO Max, Paramount+, Pluto TV, and networks including CNN, TNT, TruTV, and MTV.

PSKY shares closed down 3% on Monday, after rising as much as 11% intraday. WBD shares, meanwhile, closed up 11%.

Path Clears After July Pause

The deal had been delayed since July, when California Attorney General Rob Bonta led a coalition of 12 states, joined by the Writers Guild, in lawsuits arguing the combination would reduce competition and harm consumers.

As part of the settlement deal announced on Monday, Paramount committed to releasing at least 30 theatrical films a year, expanding U.S. production, and not selling its movie lot or the Warner Bros. lot, among other concessions. Should the studio fail to meet this 30-film threshold, it faces severe penalties, including a potential $30 million fine for each movie short of the goal and the potential forced divestment of its ownership stake in Miramax.

Why Speed Mattered

Paramount originally reached a deal to acquire Warner Bros. in February after outbidding Netflix Inc.(NFLX). It had agreed to a “ticking fee” of $650 million a quarter, or about $7 million a day, payable to Warner Bros. Discovery shareholders starting Oct. 1 if the deal was not closed by then. A trial had been set for March, which would have exposed Paramount to roughly $1.3 billion in those fees. The settlement reduces that immediate risk.

Ellison acknowledged in his letter to employees that the long fight had created “real uncertainty, and for some of you, real anxiety.” He said the company does not yet have all the answers on roles and day-to-day work after closing. Staff was directed to an Integration Hub, managers, HR, or an internal email address.

“Closing is really just the starting line,” he wrote. “Bringing two companies this size together takes time.”

How Did PSKY, WBD Retail Traders React?

Retail sentiment on Stocktwits was ‘bullish’ with ‘extremely high’ message volumes for both PSKY and WBD stock.

PSKY stock has lost 16% year-to-date, while WBD stock has gained about 6% during the same period.

Read More: GME Pops 3% After the Bell As CEO Buys $26M Worth of Shares

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