Warner Bros board rejects rival bid from Paramount
Warner Bros. Discovery’s board of directors rejected a hostile bid from Paramount Skydance, saying it failed to secure sufficient financing.
In a letter to shareholders disclosed in a regulatory filing, the board wrote that Paramount had “consistently misled” Warner Bros. shareholders that its $108.4 billion ($163.8 billion), $30 per share cash offer was fully guaranteed or “backed” by the Ellison family, led by billionaire and Oracle CEO Larry Ellison.
“There is not, and never has been,” the board wrote about the guarantee of Paramount’s offer, noting that the offer carries “numerous significant risks.”
The board said it found Paramount’s offer “inferior” to the merger deal with Netflix.
The board wrote that Netflix’s $27.75 per share offer for Warner Bros.’ film and television studios, library and HBO Max streaming service was a binding agreement that did not require equity financing and included solid debt covenants.
Warner Bros. chairman Samuel Di Piazza said in an interview with CNBC that he has not yet set a date for a shareholder vote on the deal, but that it is expected to happen in the spring or early summer in the northern hemisphere.
While Netflix welcomed the move, Paramount did not immediately respond to Reuters’ request for comment.
“The Warner Bros. Discovery Board emphasized that Netflix’s merger agreement was superior and our acquisition was in the best interest of shareholders,” co-CEO Ted Sarandos said in a statement. he said.
Netflix’s other co-CEO, Greg Peters, told CNBC that Netflix is already in contact with the U.S. Department of Justice and the European Commission and is confident regulators will view the deal as pro-consumer and pro-growth.
Last week, Paramount took its case directly to Warner Bros. shareholders, arguing that it had arranged “airtight financing” to support its bid, with $41 billion in new equity guaranteed by the Ellison family and RedBird Capital and $54 billion in debt commitments from Bank of America, Citi and Apollo.
Warner Bros. board said on Wednesday that Paramount’s latest offer includes an equity commitment “without any Ellison family commitment” but instead backing from the “unknown and opaque” Lawrence J Ellison Revocable Trust, whose assets and liabilities are not publicly disclosed and are subject to change.
The Warner Bros board wrote: “Despite being repeatedly told by WBD how important the Ellison family’s commitment to full and unconditional financing was… the Ellison family chose not to block the PSKY bid.”
“A revocable trust is not a substitute for a secure commitment by a controlling shareholder.”
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