In a unanimous written determination, the Warner Bros. Discovery’s board is advising shareholders to reject Paramount Skydance’s “inadequate” hostile takeover bid. The cites a number of concerns with the offer and reiterates its position that Netflix’s offer remains superior. Netflix and WBD have entered into a in early December after the WBD board selected its offer over other bidders.
There are two key differences between the two options: Netflix is willing to pay $82 billion, but only for the Warner Bros., HBO and HBO Max divisions; Paramount Skydance’s came in at $108 billion and is for all of WBD’s assets, including CNN, HGTV, Food Network and many more. The Netflix deal leaves those assets in the hands of WBD shareholders, to be spun off as .
Paramount Skydance made to scoop up WBD before the company even opened the process up to other bidders. The third of those early offers was reportedly in the neighborhood of $24 per share, while this most recent hostile takeover stands at .
But the WBD board has concerns. Among them, the extraordinary amount of debt required for Paramount, a studio with a market capitalization of just $14 billion, to take on an acquisition of this size. (Netflix’s market cap is over $400 billion.) This comes despite Larry Ellison, the father of Paramount CEO David Ellison, stepping in to $40 billion worth of the needed financing. The board also points out that Netflix’s offer is partially paid in the streaming giant’s shares, which it says have the potential to provide further value in the future.
At this stage in negotiations, the board also claims opting to go with Paramount Skydance’s offer would also result in WBD paying over $4 billion in termination fees.
“Your Board negotiated a merger with Netflix that maximizes value while mitigating downside risks, and we unanimously believe the Netflix merger is in your best interest,” the letter states. The merger with Netflix will still have to go before regulatory bodies in the United States and Europe.
