United States of America

Plaintiffs Challenge $1.88B Bond in Paramount-WBD Merger Fight

Is the bond demand a cynical ploy to escape accountability or a legitimate legal safeguard?

Published SEP 2

Plaintiffs Challenge $1.88B Bond in Paramount-WBD Merger Fight

Story

Above: The Paramount Skydance logo on a water tower in Los Angeles, California, on Aug. 6. Image credit: Michael Yanow/NurPhoto/Getty Images

The Facts

The attorneys general of California and 11 other states, along with the Writers Guild of America, filed a response in court on Sunday, challenging a proposed almost $2 billion bond, after suing to block Paramount Skydance's $110 billion takeover of Warner Bros. Discovery.
Reuters
TheWrap
PYMNTS
When Paramount agreed to acquire the business in February, it approved a ticking fee of 25 cents per share per quarter — roughly $7 million a day — for existing Warner Bros. Discovery shareholders if the merger had not closed by Sept. 30, 2026.
SEC
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Paramount
After a temporary restraining order was issued on July 20 enjoining the transaction, both parties entered into a stipulation that Paramount would not close the deal until the earlier of five days after the antitrust case was determined or June 1, 2027.
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In August, however, Paramount asked the court to require the plaintiffs to post a $1.88 billion bond under Section 16 of the Clayton Act on the count of being "wrongfully enjoined or restrained," arguing that under the stipulation, ticking fees would reach $1.3 billion by the time post-trial briefs are filed in April 2027, an "unrecoverable" amount.
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The Wall Street Journal
The plaintiffs, however, argued on Sunday that Paramount failed to justify modifying the stipulation to include a bond, given that Paramount proposed and negotiated the stipulation itself and that the request to treat it as a preliminary injunction contradicts positions Paramount's own counsel took in writing in July.
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Nevertheless, if the court grants a bond, the plaintiffs claimed it may waive or impose only a nominal bond where litigation upholds public interests, citing a precedent in which a court set a $10,000 bond in a state merger challenge under the Clayton Act.
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Sources Split

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The Spin

Narrative A

Of its own volition, Paramount proposed, negotiated and submitted the no-close stipulation to the court, calling it a "significant win" in public. Now, after seeing the fees racking up from its similarly self-designed ticker offer, the company has U-turned and asked for a bond to cover rising costs. This is a shameless about-face with no legal credibility, and should therefore be denied.

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Narrative B

The no-close order is a real injunction, enforceable by contempt, directed at a party and designed to preserve the exact relief plaintiffs seek, for which the Clayton Act makes a proper bond a mandatory condition. Facing unrecoverable losses from ticking fees due to wrongful delay, it is only right that the plaintiffs stump up the cash as compensation for the damages they cause.

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