PSKY, WBD Aren’t Out Of The Woods Yet: US States Could Reportedly Sue To Block $110B Merger Next Week

• California Attorney General Rob Bonta is spearheading the investigation, as per the report. 
• Any delays caused by legal challenges could become costly for Paramount. 
• In a separate report, Reuters noted that Paramount has ​said it will not close the deal before July 22 amid the ongoing Oregon probe.

Paramount Skydance Corp.’s (PSKY) $110 billion acquisition of Warner Bros. Discovery (WBD) could soon face legal hurdles, according to media reports.

Reuters said late Wednesday, citing sources familiar with the matter, that U.S. states are concerned the acquisition will hurt competition and are considering suing to block the deal as soon as next week.

California Attorney General Rob Bonta is spearheading an investigation into whether Paramount's proposed acquisition of Warner Bros. Discovery would violate U.S. antitrust laws, as per the report.

What Happens In Case Of A Roadblock?

The proposed Paramount–Warner Bros. merger is already facing pushback from Hollywood, including actors and writers, who worry the combination of the two major studios could lead to job cuts and create competitive concerns. Paramount argues the deal is necessary to compete more effectively for viewers, talent, and investment in an increasingly challenging media landscape.

Any delays caused by legal challenges could become costly for Paramount.

Paramount is expected to carry roughly $80 billion in debt after the merger closes, and if the deal remains pending beyond October, Ellison has agreed to pay Warner Bros. shareholders a 25-cent-per-share "ticking fee," worth about $650 million per quarter.

While several states are coordinating their efforts on the lawsuit, the timing of the lawsuit remains uncertain and could shift, according to the report.

A successful court case could also force Paramount and Warner Bros. to hold and operate their assets separately, delaying the $6 billion in cost cuts that Paramount has said it would make after the deal closes.

PSKY-WBD Deal Timeline Update

In a separate report, Reuters noted that Paramount has ​said it will not close the deal before July 22 amid the ongoing Oregon probe, as per the Oregon attorney general's office.

Oregon regulators are seeking a court order requiring the company to turn over records and delay the merger by 60 days while officials examine the deal.

Paramount had previously said it would not complete the acquisition before July 16 and is now extending the timeline by a week.

Retail Stance On PSKY, WBD

On Stocktwits, retail sentiment for PSKY and WBD stocks slightly improved from ‘bearish’ to ‘neutral’ over the past 24 hours.

Meanwhile, retail chatter around PSKY stock was in the ‘low’ territory, while it was ‘normal’ for WBD. The latter was also among the top trending tickers on Stocktwits.

One retail user said, “This merger must be stopped.”

Another user appeared more concerned about the immediate consequences of the regulatory holdup: “Does this mean it still closes in the 3rd quarter or we rolling into the 4th quarter???”

PSKY shares have dipped about 26% so far this year, while WBD stock has lost more than 8% of its value in the same time.

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