COLUMBUS — Ohio Attorney General Dave Yost has alleged WarnerMedia and Discovery (WBD) misled investors during its merger and filed a securities class action lawsuit against the company, according to a spokesperson for the Ohio Attorney General’s Office.
He filed a motion asking to be the lead plaintiff in the U.S. District Court for the Southern District of New York on November 22.
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WarnerMedia and Discovery completed its merger on April 8.
The suit is claiming the company, “deliberately misled investors during the merger of WarnerMedia and Discovery Inc., fueling $25.5 million in losses for the Ohio Public Employees Retirement System (OPERS) and the State Teachers Retirement System (STRS),” the Ohio Attorney General’s office said in a news release.
The suit alleges WBD and company executives, David Zaslav and Gunnar Wiedenfels, “either knew or had access to adverse financial information about WarnerMedia but did not disclose as required by law - before the merger closed back in April,” the Ohio Attorney General’s office said.
“Warner Bros. Discovery willfully withheld financial information that it was legally obligated to reveal for one highly self-serving reason-to ensure the merger’s approval,” Yost said. “In doing so, it created market distortions that cost Ohio’s pension systems and other institutional investors dearly, and that is not OK.”
Had the true state of WarnerMedia’s business been disclosed, the merger consideration would have been significantly higher for OPERS, STRS and other Discovery stockholders, according to the Ohio Attorney General.
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The lawsuit says that from April 11, 2022 – the first trading day after completion of the merger – to Sept. 23, 2022, the price of WBD’s common stock dropped 52.4% (from $24.78 per share to $11.79 per share) as the market became aware of the misrepresented and omitted facts, Ohio AG Yost said.
The decline erased more than $31 billion in WBD’s market capitalization.
News Center 7 reached out to Warner Bros. Discovery for a statement and are waiting to hear back.
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