- WBD unanimously recommends shareholders reject amended Paramount offer
- Board cites significant costs,risks and uncertainties
- Paramount offer “remains inferior” too Netflix merger agreement
Warner Bros Finding’s (WBD) board has again unanimously recommended the company’s shareholders reject a antagonistic takeover offer from Paramount Skydance,calling the latest bid “inadequate”.
Paramount, controlled by the Ellison family, tabled a US$108.4 billion proposal in December to acquire WBD, possibly derailing Netflix’s US$82.5 billion offer, which WBD had already accepted.
While Netflix aims to acquire WBD’s studio and streaming assets, Paramount believes its all-cash bid for the entire business is superior.
WBD previously urged shareholders to reject Paramount’s offer last month, citing significant risks compared to the Netflix proposal, which the board deemed well-financed and offering stronger long-term value.
On December 22nd, Paramount amended its offer with a personal guarantee of over US$40 billion from Oracle’s Larry Ellison, aiming to address WBD’s need for financial versatility.
Though,WBD’s board maintains the proposal isn’t in shareholders’ best interests and doesn’t qualify as a ‘superior proposal’ under its Netflix agreement.
The board encourages WBD shareholders to support the Netflix merger and reject Paramount’s offer.
“The board unanimously persistent that Paramount’s latest offer remains inferior to our merger agreement with Netflix across multiple key areas,” said Samuel A Di Piazza Jr, chair of the WBD board of directors.
“Paramount’s offer continues to provide insufficient value, including ample debt financing that creates risks and lacks protections for our shareholders if the transaction fails.
“Our binding agreement with Netflix will offer superior value with greater certainty, without the significant risks and costs Paramount’s offer would impose.”
The board sent a letter to WBD shareholders detailing its advice.
WBD would face a US$2.8 billion breakup fee if it abandoned the Netflix deal. Paramount’s revised offer included a US$5.8 billion termination fee.
Though, WBD estimates accepting Paramount’s deal would incur US$4.7 billion in costs – including the Netflix breakup fee, additional debt interest, and a US$1.5 billion fee for terminating a debt exchange – costs not present in the Netflix transaction.
While WBD’s board is firm, either deal faces regulatory scrutiny.Lawmakers and industry leaders have expressed concerns, and Donald Trump – with close ties to the Ellisons – indicated potential involvement.
Netflix co-chief executives Ted Sarandos and Greg Peters stated WBD’s board recognizes their bid as the “superior proposal”, delivering the greatest value to stockholders, consumers, creators, and the entertainment industry.
Netflix is engaging with competition authorities, including the US Department of Justice and the European commission, and expects the transaction to close within 12 to 18 months of the original merger agreement.
Paramount has yet to comment on the rejection. They could continue their hostile bid by appealing directly to WBD shareholders or increasing their US$30-per-share bid and addressing WBD’s concerns.
Paramount has indicated its latest offer isn’t its “best and final” proposal.
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