Warner Bros. Discovery has once again rejected a takeover bid from Paramount Skydance, and told shareholders to stick to its deal with Netflix. Paramount had launched a hostile bid worth $108.4 billion for the company after Netflix struck a deal to buy WBD’s TV, film studios and streaming assets for $27.75 per share, following a fierce bidding war involving Paramount and Comcast.
WBD said Wednesday that its board determined Paramount’s offer is not in the best interests of the company or its shareholders. It again recommended shareholders support the Netflix deal.
“Paramount’s offer continues to provide insufficient value, including terms such as an extraordinary amount of debt financing that create risks to close and lack of protections for our shareholders if a transaction is not completed,” Warner Bros. Discovery Chair Samuel Di Piazza Jr. said in a statement. He also said that the company’s agreement with Netflix “will offer superior value at greater levels of certainty.”
READ: Kushner’s firm withdraws from Paramount’s $108 billion bid for Warner Bros. Discovery (
Paramount had recently announced an “irrevocable personal guarantee” from Oracle founder Larry Ellison — who is the father of Paramount CEO David Ellison — to back $40.4 billion in equity financing for the company’s offer. Paramount also increased its promised payout to shareholders to $5.8 billion if the deal is blocked by regulators, matching Netflix’s breakup fee.
The competition between the two companies — Paramount and Netflix — is complicated by the fact the companies want different things. Netflix’s proposed acquisition includes only Warner’s studio and streaming business, which include its legacy TV and movie production arms and platforms like HBO Max.
Paramount, on the other hand wants the entire company, which beyond studio and streaming, includes networks like CNN and Discovery. If Netflix is successful, WBD’s news and cable operations would be spun off into their own company, under a previously-announced separation.
READ: Paramount moves on $108.4 billion hostile takeover of Warner Bros. Discovery (
A merger with either company will take around a year. It is also bound to attract significant antitrust scrutiny. Due to its size and potential impact, it will almost certainly trigger a review by the U.S. Justice Department, which could sue to block the transaction or request changes. Other countries and regulators overseas may also challenge the merger. President Donald Trump had stated he would have a say on whether the proposed merger between Netflix and Warner Bros would go ahead.
Trade groups across the entertainment industry have continued to sound the alarm about both deals. Cinema United, which represents the more than 60,000 movie screens worldwide, reiterated it was “deeply concerned” that Netflix’s acquisition could harm both moviegoers and people who work in theaters, pointing to the streaming giant’s past reliance on its online platform, in a statement addressed to a Congressional antitrust subcommittee on Wednesday.