Warner Bros rejects takeover offer from Paramount
By WYATTE GRANTHAM-PHILIPS and MICHELLE CHAPMAN, Associated Press
NEW YORK — Warner Bros. again rejected a takeover bid from Paramount and asked shareholders Wednesday to stick with Netflix’s competing offer.
Warner executives have repeatedly rebuffed overtures from Skydance-owned Paramount and just weeks ago urged shareholders to support the sale of its streaming and studio businesses to Netflix for $72 billion. Paramount, meanwhile, sweetened its $77.9 billion offer for the entire company and made a hostile offer directly to shareholders.
Warner Bros. Discovery said Wednesday that its board of directors had determined that Paramount’s offer was not in the best interests of the company or its shareholders. He 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 creates closing risks and a lack of protection for our shareholders if a transaction is not completed,” Warner Bros. Chairman Samuel Di Piazza Jr. said. Discovery, in a press release. “Our binding agreement with Netflix will deliver superior value with higher levels of certainty, without the significant risks and costs that Paramount’s offer would impose on our shareholders.”
Paramount did not immediately respond to a request for comment.
Late last month, Paramount 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 offering. Paramount also increased the promised payout to shareholders to $5.8 billion if the deal is blocked by regulators, matching what Netflix has already offered.
In a letter to shareholders, Warner expressed concerns about a possible deal with Paramount. He said he essentially viewed the offer as a leveraged buyout, which involves a lot of debt, and that it could take 12 to 18 months to close a deal.
The battle for Warner and the value of each deal is getting more complicated because Netflix and Paramount want different things. Netflix’s proposed acquisition only involves Warner’s studios and streaming businesses, including its former TV and film production arms and platforms like HBO Max. But Paramount wants the entire company — which, beyond the studio and streaming, includes networks like CNN and Discovery.
If Netflix succeeds, Warner’s news and cable businesses would be consolidated into their own company, in a previously announced separation.
A merger with either company will attract increased scrutiny from antitrust authorities. Because of its scale and potential impact, it will almost certainly trigger a review by the U.S. Department of Justice, which could file a lawsuit to block the transaction or seek changes. Other foreign countries and regulators could also challenge the merger.
