Skydance Corp (NYSE:SKYD) shares are slipping Wednesday, a day after the company wrapped up its takeover of Warner Bros. Discovery.
- Skydance stock is testing lower boundaries. Why is SKYD stock at lows?
Skydance Shares Fall a Day After Closing its Warner Bros. Discovery Deal
Skydance, formerly Paramount Skydance Corp (NASDAQ:PSKY), finished buying Warner Bros. Discovery Inc (NASDAQ:WBD) on Tuesday. Its Class B stock debuted on the New York Stock Exchange under the SKYD ticker the same day, and WBD shareholders collected roughly $31.02 per share in cash. Competition authorities in nearly 70 jurisdictions all approved the deal.
Paramount’s pursuit took just over a year. Warner Bros. Discovery rejected three Paramount offers, then agreed to sell its studios and streaming business to Netflix. Paramount responded with a hostile all-cash offer for the whole company. State attorneys general later raised antitrust objections, and the sides settled, CNBC reported.
Skydance Sets $6 Billion Synergy Target For the Combined Company
The takeover expands Skydance’s holdings to two major film studios and two global streaming services, plus CBS, HBO, CNN and sports networks. Skydance says it counts more than 200 million streaming subscribers and nearly $70 billion in revenue. Chairman and CEO David Ellison marked the closing with a statement: “Today is a historic day, not just for Skydance but for our entire industry.”
The company laid out several goals, including expectations for at least $6 billion in run-rate synergies within three years, with savings coming mainly from technology, integration, procurement, marketing and real estate. It also plans to lower net leverage to 3.0 times by the end of 2029 and generate more than $10 billion in free cash flow by 2030. Skydance also pledged at least 30 theatrical films a year, each with a theater window of at least 45 days.
Despite the positive outlook from management, analysts are concerned about the company’s ability to drive positive financial performance after the merger, which includes approximately $80 billion in debt for the combined company. Barclays analyst Kannan Venkateshwar maintained Skydance with an Underweight and lowered the price target from $8 to $7 on Wednesday.
Skydance Adds Three New Directors to its Board
After the closing bell on Tuesday, Skydance named its board designees, effective immediately. The board keeps every current Paramount director. It adds Ynon Kreiz, Skydance co-CEO, and two independent directors. They are Laurene Powell Jobs, founder and president of Emerson Collective, and Bobby Kotick, founder and former CEO of Activision.
Skydance also released final results on its offers to buy or swap Warner Bros. Discovery debt. Investors tendered about 98.83% of the notes in the cash offers and about 99.15% in the exchange offers. Exchange holders get new Skydance notes of equal principal amount, and Skydance expects settlement on Friday.
SKYD Shares Are Tumbling
SKYD Price Action: Skydance shares were down 7.87% at $8.77 at the time of publication on Wednesday, according to Benzinga Pro.
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