David Ellison said the vision behind Skydance Corp., formed Tuesday by the closing of the Paramount-Warner Bros. Discovery merger, was to “create a stronger competitor” and build a company that “empowers creatives, entertains audiences and rewards shareholders.”
But on Day One of the new Skydance, investors seem skeptical of its prospects: Shares of the company, newly listed on the New York Stock Exchange under the ticket symbol “SKYD,” drooped 2.7%, closing at $9.51 per share at the close of regular trading Tuesday. During the day, the stock was down as much as -6% but briefly crossed into positive territory with an intraday high of $9.84/share.
Paramount Skydance voluntarily withdrew its Class B common stock from the Nasdaq Global Select Market (under the ticker “PSKY”), and listing and trading of those shares ended at market close Monday, Oct. 5. Trading of SKYD shares began on the NYSE at market open Tuesday.
Next week, a big bunch of shares in Skydance Corp. will be available to holders of PSKY stock to purchase for an initial exercise price (strike price) of $12 per share — meaning that, for now, those are underwater.
The company’s board set Oct. 13 as the date to distribute 471.3 million warrants giving holders of PSKY Class B shares the option to purchase shares of SKYD Class B common stock. Each warrant entitles the holder to purchase one share of SKYD for $12.00; investors have up to 10 years to exercise the warrants. According to the company, on or about Oct. 13, it will distribute one warrant for each share of PSKY Class B common stock held as of Oct. 5.
The warrants issued to PSKY shareholders are intended to provide them the opportunity to purchase shares of Skydance’s Class B common stock “on similar terms” to those offered to the parties in the $47 billion equity syndicate backing the Warner Bros. Discovery deal, including David Ellison; his father, Larry Ellison; Gerry Cardinale, head of RedBird Capital Partners; LionTree; and the sovereign wealth funds of Saudi Arabia, Qatar and Abu Dhabi. Those equity investments in SKYD were priced at $12 per share.
The Ellison family and RedBird are the sole holders of Skydance’s Class A stock, giving them 100% control the voting shares.
Meanwhile, shares of Warner Bros. Discovery ceased trading on the Nasdaq. With the deal closing, WBD shareholders received an amount in cash equal to $31.01666668 per share.
As of Oct. 2, according to Paramount Skydance, 1,093,020,754 shares of its Class B common stock were issued and outstanding, of which approximately 622 million shares were held by or for the account of restricted holders, the Paramount Global 401(k) plan and the Paramount Global Master Trust (which will be excluded from the warrant distribution). If all 471.3 million warrants were exercised and settled, there would have been an aggregate of 1,564,320,754 shares of Class B common stock issued and outstanding as of Oct. 2.