Skydance Stock Plunges 25% After 471 Million Warrants Issued to Paramount Investors

Skydance Corp., formed by the merger of Paramount and Warner Bros. Discovery, fell as much as 25% in Wednesday trading. The drop came as Skydance, led by David Ellison, chairman and CEO, distributed about 471 million warrants that allow holders of Paramount Skydance Class B PSKY shares to buy shares at […]

Shares of Skydance Corp. Formed from the merger of Paramount and Warner Bros. Discovery, it fell as much as 25 percent in Wednesday trading. The reduction came as Skydance, led by President and CEO David Ellison, distributed about 471 million warrants that would have given holders of Paramount Skydance Class B PSKY shares the option to buy shares in the new company.

As of 11 a.m. ET, shares of Skydance — which traded on the New York Stock Exchange on Oct. 6 under the symbol "SKYD" — were down 25.4 percent to $6.78 a share. The current market value of this company is estimated at 34 billion dollars. Related Stories Pedro Pascal in 'Behemoth!': The Oscar-worthy role he (and Latinos) have been waiting for Oscar Prediction: Supporting Actor - How Many Men Can Get Nominated From 'Odyssey'?

Each warrant issued to PSKY holders initially entitles them to purchase one Skydance share for $12. If all of these warrants are exercised, they will raise about $5.65 billion for the company, while increasing the number of shares and diluting the ownership of existing shareholders. It is not clear how many guarantees have been applied so far. Popular in Variety

In connection with the distribution of Skydance stock warrants to PSKY holders, New York announced after the market closed on Tuesday that it will reduce the closing price of Skydance's Class B common stock by $0.19,368 per share (from approximately $9.27 to approximately $9.07) based on the warrants' closing price of $2.20 (trading on the NYSE under "SKYD WS").

The warrants issued to PSKY shareholders give them the opportunity to purchase Skydance Class B common stock "on similar terms" to shares offered to parties in the $47 billion equity syndicate backing Warner Bros.'s Discovery deal, including David Ellison. his father, Larry Ellison; Jerry Cardinale, president of RedBird Capital Partners; Lion Tree; and sovereign wealth funds of Saudi Arabia, Qatar and Abu Dhabi. These equity investments in SKYD were priced at $12 per share.

While Skydance's share price move on Wednesday was mostly due to the issuance of stock warrants, Wall Street was not bullish on Paramount and Warner Bros.

The Paramount-WBD deal, valued at $111 billion assuming WBD's debt, brings together the two major studios, television networks including CBS, CNN, Comedy Central, MTV and TBS, and streaming services Paramount+ and HBO Max.

Last week, after the deal closed, Ellison and fellow executive Yenon Kreis (former Mattel boss) announced their senior executive management team for the new Skydance.