Warner Bros Discovery (WBD) has rejected Paramount Skydance’s latest attempt to buy the studio, saying its revised $108.4 billion hostile bid was ‘inadequate’ and amounted to a risky leveraged buyout,
the company said in a statement on Wednesday.
As per the statement, the WBD board has advised its shareholders that December’s revised offer from Paramount was still not as appealing as the existing agreement with Netflix — even though Paramount said it had addressed many of Warner Bros.’ biggest concerns.
AFP quoted the company stating that the board “has unanimously determined that Paramount Skydance’s tender offer… is not in the best interests of WBD and its shareholders and does not meet the criteria of a ‘Superior Proposal’ under the terms of WBD’s merger agreement with Netflix”.
The WBD board has also called Paramount’s hostile takeover offer “inadequate” and overly risky. In the letter to the shareholders, the board likened Paramount’s proposal to a leveraged buyout.
The revised Paramount offer “remains inadequate, particularly given the insufficient value it would provide, the lack of certainty in PSKY’s ability to complete the offer, and the risks and costs borne by WBD shareholders should PSKY fail to complete the offer,” Reuters quoted the board saying.
Paramount is much smaller than WBD, so “to effect the transaction, it intends to incur an extraordinary amount of incremental debt — more than $50 billion — through arrangements with multiple financing partners,” the letter stated.
Paramount had sought to alleviate concerns about the financing by pointing to the fact that one of the world’s richest people, Oracle billionaire Larry Ellison, is bankrolling much of the proposed takeover, CNN reported. However, WBD has reaffirmed its commitment to streaming giant Netflix’s $82.7 billion deal for the film and television studio and other assets.
“From our perspective, they’ve got to put something on the table that is compelling,” CNBC quoted Warner Bros Chairman Samuel Di Piazza saying while referring to the Paramount offer.
This comes weeks after WBD had urged its shareholders to reject the hostile takeover bid by Paramount, saying that a merger with Netflix would expand consumer choice, strengthen distribution reach, and create new opportunities for the creative community.
Paramount and Netflix have been fighting for the control of Warner Bros, and with it, its prized film and television studios. WBD’s lucrative entertainment franchises include “Harry Potter”, “Game of Thrones”, “Friends” and the DC Comics universe, as well as coveted classic films such as “Casablanca” and “Citizen Kane.”
Warner Bros. Discovery, whose operations span Warner Bros Entertainment, Turner Entertainment, DC Comics, Hanna-Barbera and Cartoon Network, added that Netflix’s portfolio of global content and studio capabilities would complement its own business rather than overlap with it.
In December, Paramount had directly appealed to Warner Bros. shareholders, asking them to reject the Netflix-backed deal that has the support of the Warner Bros. board. Paramount has offered $30 per Warner share, higher than Netflix’s bid of $27.75 per share.
Following the latest decision by WBD, Reuters quoted Netflix co-CEOs Ted Sarandos and Greg Peters saying it recognises the streaming giant’s deal “as the superior proposal that will deliver the greatest value to its stockholders, as well as consumers, creators and the broader entertainment industry.”
