Paramount has asked states challenging its merger with Warner Bros. Discovery (WBD) to post a bond of nearly $1.9 billion. The motion was filed on Monday as lawsuits from 12 states and the Writers Guild of America continue. These groups argue that the merger is unfair to competition. Paramount's request is based on costs linked to 'ticking fees' that will start on October 1, 2026, if the merger is not completed by then.
Key Details
The 'ticking fees' are about $7 million per day, which Paramount would owe to WBD shareholders. By the time the trial ends in March 2027, Paramount estimates it will have faced around $1.3 billion in unrecoverable costs from these fees. The company argues that the states and the Writers Guild should pay these costs if they lose the lawsuit. However, legal experts believe it is unlikely the judge will require the plaintiffs to post such a bond. Corey Martin, an M&A lawyer, said the judge has the power to decide and may not agree to the bond request.
Background
The lawsuit has already had some early rulings. This includes a temporary restraining order from Judge Araceli Martinez-Olguín, who previously did not impose a bond requirement. Paramount has received approval from various regulatory bodies for the merger, including the U.S. Department of Justice and the European Commission. However, the ongoing lawsuit is a major hurdle for closing the deal.
The bond request could affect how investors view the merger's chances. If the bond is required, it may indicate higher legal risks for Paramount, which could impact its stock price. Investors will be watching the trial set for March 2027. This trial will determine the future of the merger and its financial effects on Paramount.
Based on reporting by: us.cnn.com, cnn.com