Warner Bros reportedly poised to reject Paramount’s $108bn hostile takeover bid | Mergers and acquisitions
Warner Bros Discovery is set to tell shareholders to reject Paramount’s $108bn (£81bn) hostile bid, according to reports, paving the way for Netflix to make a takeover of the Hollywood film and TV group.
The board could announce a decision as soon as Wednesday after Paramount Skydance – led by David Ellison and financed by his billionaire father, Oracle founder Larry – went directly to shareholders with its rival offer almost two weeks ago.
Netflix had won the bidding for the studio and streaming company with an $82.7 billion bid days earlier – taking control of valuable assets including the Harry Potter and DC Comics superhero film franchises, as well as HBO, home to hit shows such as Game of Thrones, The White Lotus and Succession.
The streaming company’s deal does not cover WBD’s cable channels, which include CNN, TBS and TNT, which are expected to be spun off into a separate company next year.
Although Paramount tabled a higher, all-cash offer to take over all of WBD’s assets, the Financial Times said the board had less confidence in it because it is backed by the Ellison family trust, worth nearly $250 billion in Oracle shares, rather than by Larry Ellison personally.
WBD is expected to focus on four central criticisms of Paramount’s offer, arguing that its value, financing and terms are deficient compared to Netflix’s cash and stock offer, according to reports.
On Tuesday, Affinity Partners, the investment firm led by Jared Kushner, Donald Trump’s son-in-law and advisor, withdrew its support for Paramount’s bid.
Paramount accused WBD’s board of failing to properly respond to its offer, prompting hostility from the company, and said it was not its “best and last” deal.
The company argued that Netflix’s bid would likely face greater regulatory scrutiny because purchasing HBO Max would give it a dominant position in the North American streaming market in particular, while Netflix argued that while big players such as YouTube were included, this was not the case.
Netflix proposed a termination fee of $5.8 billion, a high amount for a buyout transaction, indicating the streaming company’s confidence in its ability to get the deal through the regulatory process.
Questions have also been raised about whether regulators would object to the high level of financing Paramount has secured from sovereign wealth funds in Qatar, Saudi Arabia and Abu Dhabi.
Filings with the U.S. Securities and Exchange Commission show the three sovereign wealth funds will contribute $24 billion, or nearly 60 percent of the $40.7 billion in equity, or double the Ellisons’ contribution.
Federal Communications Commission ownership rules prevent foreign investors from owning 20 percent of broadcast or telecommunications licensees such as CBS and CNN.
Paramount said those rules did not apply in the case of its bid because the heritage funds agreed to give up governance rights, including representation on the board of directors.
WBD and Paramount declined to comment.
