WBD Stock Is Down 6% Since Accepting PSKY's 'Superior' Deal — Michael Burry Says He 'Doesn't Trust The Buyer'

• ‘I don’t trust the buyer,’ Burry said in response to a trader's question about the price gap.
• Warner Bros formally accepted Paramount’s acquisition offer on Feb. 27; both stocks have slid since then, with a sharper drop in PSKY.
• Retail sentiment reading on Stocktwits for WBD and PSKY was ‘bearish.’

While investors seem to have largely moved on from the Warner Bros. Discovery deal saga after the media giant formally accepted Paramount Skydance’s sweetened offer last month, the stock’s continued weakness is raising eyebrows in parts of the market.

WBD shares are down nearly 4% since the Feb. 27 deal announcement, hovering around $27. Notably, the stock never approached Paramount’s $31 offer price – a typical pattern in M&A deals – and has since drifted even lower.

Burry Skeptical Of Paramount

The nearly 14% arbitrage caught the eye of a trader, who asked noted investor Michael Burry about the anomaly on the latter’s AMA discussion on his Substack Page.

“I do not trust the buyer here. If it was Netflix, the arb (arbitrage) spread would not be this wide,” Burry responded. Notably, Burry’s positions are widely watched in the market after he shot to fame by predicting and profiting from the 2008 financial market crash. He did not elaborate on his view.

WBD's stock price suggests investors may be pricing in some risk around the deal. 

Paramount Clinched WBD Deal - Was It Worth It?

Paramount fought tooth and nail to clinch the deal from Netflix; however, some commentators have questioned whether the deal, now carrying a higher price tag and a heavier debt load, is truly in Paramount’s best long-term interest.

PKSY stock, itself, is about 35% below the level just before the formal deal announcement. Netflix shares are up about 10%.

Paramount did not just raise its offer for WBD, now totalling $111 billion, but also committed to pay Netflix a $2.8 billion breakup fee.

Moreover, reports said that Paramount is in talks to raise as much as $57.5 billion from Bank of America Merrill Lynch, Citi, and Apollo to fund the deal. The company already had total debt of $14.8 billion as of December.

The deal also involves a massive, $45.7 billion, equity commitment from Larry Ellison, the father of Paramount Chairman Larry Ellison – a fortune that Ellison senior earned from his company, Oracle.

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