NEW YORK, July 20, 2026, 15:07 EDT (U.S. markets open).
- Shares of WBD dropped 3.4% to $25.95 as of a 14:52 EDT quote.
- A U.S. judge has halted the Paramount closure until August 3.
- The stock was $5.05 under the $31 offer price, representing a 19.5% gross spread.
Shares of Warner Bros. Discovery fell on Monday following a federal judge’s decision to halt the proposed sale. Paramount Skydance Corporation NASDAQ:PSKY has been prevented from completing the $110 billion deal until after August 3.
The market rapidly adjusted the valuation of the deal. Shares of WBD were at $25.95, trading 16.3% under the $31 cash offer. If closed on its initial terms, the transaction would yield a 19.5% gross return.
The spread in dollar terms reached $4.13 when shares ended Friday at $26.87. On Monday, it increased by 92 cents, representing a 22.3% jump.
| Merger-arb indicator | July 17 close | July 20, 14:52 EDT | Change |
|---|---|---|---|
| WBD stock price | $26.87 | $25.95 | -3.4% |
| Spread to $31 bid | $4.13 | $5.05 | +22.3% |
| Total potential gain to bid | 15.4% | 19.5% | +4.1 percentage points |
Calculations are based on the reported cash consideration and current market quotes.
The agreement provides shareholders with modest compensation for the extended delay. From September 30 onwards, the consideration increases by $0.00277778 per share each day, amounting to 25 cents for every 90-day span.
A complete 90-day payment offsets just 5% of Monday’s gap. This indicates the spread likely reflects break risk rather than purely timing.
Judge Araceli Martínez-Olguín found that the states had demonstrated a “strong showing” that competition would be unlawfully reduced. She set an August 3 hearing to consider a longer preliminary injunction. Reuters
Twelve states say they make up a total 27% share of wide-release movie distribution. The judge noted this level might breach antitrust regulations. She also pointed to job losses that would be difficult to reverse and the exchange of sensitive data.
Paramount contends the lawsuit misrepresents established antitrust principles. The company claims postponement would negatively impact employees following prolonged upheaval in the industry.
PSKY stock fell 0.5% to $8.71, while WBD took the brunt of the market response.
WBD reported that initial results from the April 23 vote indicated strong support from shareholders. The company maintained its forecast for closing in the third quarter, pending regulatory approvals.
In March, Chief Executive David Zaslav stated the companies were “working closely with Paramount to close the transaction.” The timetable was upended by Monday’s order. Warner Bros. Discovery IR
The next key court date is set for August 3. The original term of the agreement concludes on March 4, 2027, but if specific regulatory issues remain unresolved, it will automatically be extended to June 4.
Risks are still balanced on both sides. A favorable court decision may narrow the spread rapidly, while a lengthy injunction could keep WBD entangled in legal proceedings and dependent on its own business performance. Postponed payments adjust for timing but leave the current $5.05 difference intact.
