An apparent takeover attempt being concocted by a peer was the main factor behind Warner Bros Discovery (WBD 28.91%) stock’s precipitous rise on Thursday. On a media report that the storied entertainment company is in play, investors piled into the stock in anticipation of a generous buyout offer. Warner soared almost 29% higher in price that trading session.

Hollywood megadeal in the works?

That afternoon, The Wall Street Journal published a story stating that Paramount Skydance is making preparations to submit a majority cash bid for Warner. This effort is apparently backed by the family of Paramount Skydance CEO David Ellison, which includes Oracle co-founder and executive chairman Larry Ellison and film producer Megan Ellison. It wasn’t immediately clear which family members might be involved in the bid.

The Journal, citing unnamed “people familiar with the situation,” wrote that Paramount Skydance’s play will be for the entirety of the sprawling Warner.

The business newspaper added that in preparing a bid, Paramount Skydance hopes to get the jump on big tech and entertainment conglomerates that might want to lay their hands on Warner assets.

If successful, a combination of Paramount Skydance and Warner would be earth-shaking for the entertainment industry. Combined, the two own a dizzying number of familiar entertainment properties, including cable/streaming channel HBO, superhero franchise base DC Studios, and Nickelodeon Movies.

The Journal did not speculate as to how much Paramount Skydance plans to offer for Warner; however, the amount must be substantial. The latter company’s market cap stood at over $40 billion after the run-up in the stock following the article’s publication.

Neither Paramount Skydance nor Warner has yet officially commented on the report.

Stay tuned for more!

Given David Ellison’s successful entry into Paramount Skydance last month, plus the considerable financial firepower he and his team can marshal, I’d say the Journal‘s report has a lot of credibility. I’d be cautious in approaching Warner’s stock now, however, as we have no indication of what the price tag might be.

Eric Volkman has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Oracle and Warner Bros. Discovery. The Motley Fool has a disclosure policy.

For stock investors, one way to prosperity on Monday was by having a position in medical tech company Waystar (WAY 9.63%). After all, it was an outlier in the best way possible, since it shares zoomed almost 10% skyward on news that it’ll be a component in a popular stock index.

That gain was particularly impressive, as the benchmark S&P 500 (^GSPC 0.21%) bumped only 0.2% higher.

That’s one way to gain more prominence

That index is the S&P SmallCap 600, and Waystar will become one of the 600 selected for inclusion when a series of changes takes effect prior to market open on Monday, Sept. 22.

In a series of adjustments to several of its indexes announced following market close on Friday, S&P Global‘s S&P Dow Jones Indices tapped Waystar as one of 10 titles “graduating” to the small-cap lineup. The move is part of the index company’s quarterly realignment, in which at least a few of its many indexes are realigned.

With the ascension of the 10 stocks including Waystar, a corresponding number of companies were deleted from the S&P SmallCap 600. Several will be familiar to investors, including fast food restaurant operator Jack in the Box and storied tech company Xerox Holdings.

Index funds are always on the hunt

It’s important to stress that inclusion on an index, no matter how prominent, does not affect the underlying fundamental performance of an affected company. However, as index funds continue to be hotly popular, the increased demand should at least support their stock price.

Eric Volkman has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends S&P Global. The Motley Fool has a disclosure policy.

Bram Berkowitz has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.