Paramount Skydance has settled with California and 11 other states that sued to stop its proposed $110 billion acquisition of Warner Bros. Discovery. The settlement was reached after negotiations over the weekend and is expected to clear a significant hurdle to completing the merger.

The lawsuit was filed in July by California Attorney General Rob Bonta and attorneys general from 11 other states. The states argued that combining Paramount and Warner Bros. would reduce competition in Hollywood by bringing two major film distributors and major cable programmers under one company. A federal judge subsequently issued a temporary restraining order preventing the companies from completing the merger while the case proceeded.

The settlement follows negotiations over a series of potential concessions. Reports have indicated that Paramount discussed investing $1.5 billion in California's production industry, continuing to produce at least 30 movies annually and maintaining its studio operations in the state. Other proposed measures have included potential sales of certain cable assets and an independent editorial board for CNN.

The merger has already received clearance from the U.S. Justice Department, which concluded in June that the transaction was unlikely to harm competition or consumers after an eight-month review. Regulators in the United Kingdom and European Union have also approved the deal.

Paramount Skydance and Warner Bros. Discovery had not immediately commented on the reported settlement. If finalized, the agreement would remove one of the major legal barriers to the transaction and move the companies closer to completing one of the largest mergers in Hollywood history.