NEW YORK, July 25, 2026, 13:05 EDT — U.S. markets have ended the trading session.
- The companies are not permitted to close before either five days have passed following a merits ruling or June 1, 2027, whichever is later.
- Paramount faces a potential $1.7 billion ticking fee, representing roughly 18.5% of its market capitalization.
- WBD ended trading 20.3% under the $31 base cash offer from the deal.
Paramount Skydance NASDAQ:PSKY has agreed to a court-ordered pause that may increase the total cost of its Warner Bros. Discovery NASDAQ:WBD acquisition by approximately $1.7 billion. The legal delay now represents a significant monetary expense.
The cap represents 18.5% of Paramount’s $9.18 billion market value as of Friday. It is also equivalent to 44.7% of the company’s current adjusted EBITDA forecast of $3.8 billion.
Shares of Paramount dropped 3.3% on Friday, ending at $8.21. The stock is down 37% so far this year.
WBD shareholders have the opposite position. The closing price of $25.77 was 20.3% under the base offer of $31.
| Merger-arbitrage measure | Value | Investor read-through |
|---|---|---|
| Paramount close compared to market capitalisation | $8.21 / $9.18 billion | Buyer’s equity cushion has tightened |
| Largest possible ticking fee | $1.70 billion | 18.5% of Paramount’s market capitalisation |
| Ticking fee to 2026 projected adjusted EBITDA | $1.70 billion / $3.80 billion | 44.7% |
| WBD closing price versus offer price | $25.77 / $31.00 | 20.3% gross premium |
| Estimated payout as of June 1 | $31.678 a share | 22.9% premium over Friday’s closing price |
The initial estimate is based on a June 1 closing and 244 days accruing. Taxes, financing costs, and risk of deal collapse are not included. Figures reflect Friday’s prices, information from Paramount, and data from the merger proxy.
The June 1 forecast increases the value per WBD share by nearly 68 cents, boosting total potential gains to 22.9% prior to considering time and risk.
The payment is contingent and will be included as part of the merger consideration only if the closing occurs after September 30.
This week presented conflicting developments. Paramount secured European Commission clearance on Wednesday, while a U.S. judge on Thursday prolonged the temporary restraining order.
The stipulation issued on Friday led to the cancellation of the injunction hearing that was set for August 3. The stipulation also set a wider prohibition on closing or combining the companies.
The order remains in place until the first court milestone. Appeal rights are maintained. Each party is required to submit a trial-scheduling statement by July 31.
The upcoming filing is expected to be the primary focus for merger-arbitrage next week. According to a Reuters analysis, similar U.S. merger disputes have typically lasted eight months.
California, along with 11 other states, argues that the $110 billion deal may lead to higher film and TV pricing. Paramount stated, “We look forward to proving our case at trial.” Reuters
New York Attorney General Letitia James described the pause as a “critical victory.” The states aim to prevent the acquisition. Reuters
Chief Executive David Ellison stated in May that the WBD agreement was “on track for a Q3 close.” The deal reached on Friday shifts that schedule. Paramount
Ellison aims for the merged company to compete with Netflix NASDAQ:NFLX and Walt Disney NYSE:DIS. The holdup means that strategy remains incomplete.
Looking ahead, Paramount is scheduled to post its second-quarter earnings on August 4. The UK’s competition watchdog has an August 7 deadline for its Phase 1 review.
Risks: The spread does not resemble that of a bond. If the deal is halted or cancelled, the ticking fee will go unpaid. Appeals may prolong uncertainty following a ruling on the merits, resulting in Paramount shouldering the financing load for an extended period.
