The Warner Bros. Discovery Board reinforced that Netflix's merger agreement is superior and that the acquisition is in the best interest of stockholders.
The board of Warner Bros. Discovery has formally rejected a $108bn hostile takeover proposal from Paramount Global, arguing that the offer carries significant risks and is inferior to a rival merger agreement with Netflix.
In a statement issued, the Warner Bros Discovery board said Paramount’s bid, which values the company at $30 per share, does not provide the same level of certainty or shareholder value as Netflix’s $27.75-per-share offer. Despite the higher headline price, the board cited “significant risks and costs” associated with Paramount’s proposal.
Samuel Di Piazza Jr, chairman of Warner Bros Discovery’s board, said the company remains confident that a combination with Netflix represents “superior, more certain value” for shareholders and offers clearer strategic and financial benefits.
Paramount launched its unsolicited bid last week and urged Warner Bros Discovery shareholders to reject the Netflix-backed deal. The offer is supported by a consortium that includes Saudi Arabia’s Public Investment Fund, Abu Dhabi-based L’imad Holding, the Qatar Investment Authority, and Affinity Partners, the investment firm founded by Jared Kushner.
However, in a letter to shareholders disclosed in a regulatory filing, the Warner Bros Discovery board accused Paramount of repeatedly misleading investors by suggesting its cash offer was fully guaranteed, or “backstopped,” by the Ellison family, led by Larry Ellison. The board stated that the guarantee “does not, and never has” existed, and warned that the bid exposes shareholders to “numerous, significant risks.”
By contrast, the board described Netflix’s proposal as a binding agreement that requires no equity financing and includes firm debt commitments. Under the terms of the deal, Netflix would acquire Warner Bros Discovery’s film and television studios, its content library, and the HBO Max streaming service.
Paramount has pushed back against the criticism, insisting its financing is “airtight” and calling suggestions to the contrary “absurd.” Warner Bros Discovery’s board, however, questioned why Paramount’s existing owners were seeking substantial external backing rather than contributing more capital themselves.
The standoff sets the stage for an intensifying battle for control of Warner Bros Discovery, as shareholders weigh a higher-priced but contested hostile bid against a lower-valued deal that the board says offers greater certainty and fewer execution risks.
