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Shares of Skydance Corp. fell Wednesday after the newly formed media giant distributed nearly 471 million stock warrants to shareholders.
Skydance shares fell as much as 26% in Wednesday trading, trading at $6.68 per share as of 11:35 a.m. ET. The stock later pared some of those losses, closing down 22.2% at $7.06 a share.
The company distributed about 470.7 million warrants on Oct. 13 following its acquisition of Warner Bros. Discovery, according to a Securities and Exchange Commission (SEC) filing.
Warrants give investors the right to buy shares at a set price before they expire.
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Eligible shareholders received one warrant for each share of Skydance Class B common stock they held as of the Oct. 5 record date. Each warrant allows the holder to buy one Skydance Class B share for $12.
If all the warrants are exercised, Skydance could raise about $5.7 billion, according to the company.
The warrants are set to expire in October 2036, although they could expire earlier under certain conditions.
The warrant distribution followed Skydance’s completion of its $110 billion takeover of Warner Bros. Discovery. The deal brought brands including CBS, CNN, Paramount+ and HBO Max under one company, according to Reuters.
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The combined company began trading on the New York Stock Exchange under the ticker “SKYD” following the deal.
Wells Fargo analysts said the warrant distribution marked the “final step” in closing the Warner Bros. Discovery transaction, according to Variety.
CEO David Ellison has said the merger would help Skydance better compete with streaming and technology giants including Netflix and Amazon, Reuters reported.
Skydance plans to combine HBO Max and Paramount+ into a single streaming service while pursuing about $6 billion in planned savings.
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The combined company is expected to carry roughly $80 billion in debt, according to Reuters.
FOX Business reached out to Skydance for comment.
Reuters contributed to this report.
