Skydance Corp. shares fell sharply Wednesday after the company distributed about 470.7 million stock warrants to eligible shareholders. The stock dropped as much as 26% during the session, reaching $6.68, before closing at $7.06, down 22.2%, according to the supplied report.
A Securities and Exchange Commission filing cited in the report says the warrants were distributed Oct. 13, after Skydance completed its acquisition of Warner Bros. Discovery. Shareholders who held Skydance Class B common stock on the Oct. 5 record date received one warrant for each share they owned.
Each warrant gives its holder the option to purchase one Class B share for $12. The warrants are scheduled to expire in October 2036, though the filing allows for an earlier expiration under certain conditions. Skydance said that if every warrant is exercised, the company could raise approximately $5.7 billion.
The distribution followed the completion of Skydance’s $110 billion takeover of Warner Bros. Discovery. The combined company brings properties that include CBS, CNN, Paramount+, and HBO Max under one corporate umbrella, according to the report. It began trading on the New York Stock Exchange under the ticker symbol SKYD after the transaction.
Wells Fargo analysts described the warrant distribution as the final step in completing the Warner Bros. Discovery deal, Variety reported. The report did not provide further detail about the analysts’ assessment or explain the market’s specific reasons for the share-price decline.
Skydance Chief Executive David Ellison has said the merger would help the company compete with streaming and technology businesses such as Netflix and Amazon, Reuters reported. The company plans to combine HBO Max and Paramount+ into a single streaming service and pursue about $6 billion in planned savings.
The combined company is expected to carry roughly $80 billion in debt, according to Reuters. Skydance did not provide a response to Fox Business’s request for comment, according to the report. The source material does not establish whether the warrant distribution alone caused the stock’s decline.
