Paramount wants states, WGA to post $1.9B bond to cover merger pause losses
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Paramount Skydance on Monday asked the court presiding over the two lawsuits filed to block its merger with Warner Bros. Discovery to order plaintiffs to cover the losses of its merger delay.
Why it matters: The $1.9 billion bond Paramount is seeking would put an enormous financial strain on the 12 states that have joined together to sue to block the deal, as well as the Writers Guild of America, which has filed its own lawsuit to stop the merger.
Catch up quick: Last month, a dozen state attorneys general sued to block Paramount Skydance's $110 billion takeover of WBD.
- A federal judge issued a temporary restraining order shortly after, forcing Paramount to pause its takeover of WBD.
Reality check: Paramount later agreed to postpone closing its merger for even longer to avoid having to litigate and possibly lose a preliminary injunction requested by both parties suing to block the takeover.
- That tactic, it believed, was the fastest way to close its deal, although it almost certainly guaranteed the company would owe WBD shareholders money, unless it settled the lawsuits quickly.
- Paramount has promised WBD shareholders a ticking fee of 25 cents a share for every quarter the deal doesn't close after Sept. 30, totaling around $650 million per quarter.
Zoom in: In a statement Monday, Paramount said federal law "expressly provide that plaintiffs are required to post a bond covering the potential harm from halting a transaction to litigate, so that if they lose, the injured party has a source of recovery for the damage caused."
- It says it's determined the bond based on the calculation of the maximum potential ticking fee and financing costs from the litigation.
- "By virtue of what will be at least an eight-month delay in closing, there will be no integration and no ramped-up investment in content, production, and creative talent by the combined company," the company said. "Of course, in addition, employees of both Paramount and WBD are also harmed by the uncertainties caused by the delay."
What's next: It will be up to the judge overseeing the cases to decide whether the plaintiffs do owe Paramount any financial security and, if so, how much.
