Adds share moves in paragraphs 4-5, adds background in paragraphs 6-8

By Jody Godoy

June 5 (Reuters) - A group of U.S. states is preparing a lawsuit to block Paramount Skydance's PSKY.O $110 billion acquisition of Warner Bros WBD.O, two sources familiar with the matter told Reuters on Friday.

While it was not immediately clear which states would sue, California Attorney General Rob Bonta had told Reuters in an interview on Thursday that his office would be making a decision on whether to take action soon.

A spokesperson for Bonta's office declined to comment on Friday.

Shares of Warner Bros fell after the news, and were down 1.8%. Paramount shares added slightly to losses and were down 4%

Hollywood and Wall Street have been closely watching the high-stakes deal, which would bring ​together some of the entertainment industry's most enduring franchises.

The proposed transaction has faced pushback from actors, writers and others in Hollywood over its potential to eliminate jobs.

Paramount has denied the deal will decrease creative jobs, saying it will need to create more content after the transaction to attract streaming subscribers.