According to an individual with knowledge of the matter, the US Department of Justice has approved the proposed takeover of Warner Bros. Discovery by Paramount Skydance, a source indicated on Friday.

This approval marks a significant milestone for the transaction valued at approximately $110 billion, which had faced criticism over antitrust concerns. However, the deal could still encounter legal challenges from state attorneys general. Previous reports noted that California's Attorney General, Rob Bonta, is among the officials reviewing the proposal.

Shares of Paramount experienced a surge of over 5% in after-hours trading.

Paramount CEO David Ellison informed investors during the company's April earnings call that the transaction is expected to be finalized before September. Completion would trigger a so-called "ticking fee," thereby increasing the overall cost of the deal. The proposed merger has already received approval from Warner Bros. Discovery shareholders.

In late February, Paramount put forward an offer to acquire all assets of Warner Bros. Discovery for $31 per share. The target company's portfolio includes cable networks such as CNN and TBS, the Warner Bros. film studio, and the streaming service HBO Max. This proposal followed multiple previous offers and superseded an earlier agreement with Netflix, under which Netflix was to acquire Warner Bros. Discovery's streaming and film assets.

Paramount is still awaiting clearance from European regulators. Earlier this week, EU authorities initiated a review of the proposed transaction, setting a provisional deadline of July 14 for their investigation, according to an announcement on their website.

In a regulatory filing on Wednesday, Paramount stated that the deal has already received approval from the Australian Competition and Consumer Commission.