Warner Bros. Discovery rejects Paramount’s first takeover bid
Warner Bros. Discovery rejects Paramount’s first takeover bid
WBD says the initial offer from Paramount Skydance wasn’t high enough to seal the deal.
Paramount Skydance is going to have to search around for a little extra scratch if it wants to become the owner of Warner Bros. Discovery. That’s according to multiple reports, which indicate that Paramount’s first attempt to make its purchase of WBD official was rebuffed for not being a substantial enough offer.
Key Details:
- Big bills, or small?: Paramount approached WBD with a majority-cash offer in late September.
- Try again: Reports indicate a new bid is already in the planning stages.
- Get hostile?: The Ellisons could approach WBD shareholders directly to try to get things moving.
David Ellison and his fellow Paramount Skydance executives are going back to the drawing board, as their first bid for WBD was deemed too low by the company. The Wall Street Journal reports that Paramount made overtures to WBD in late September with a mostly-cash offer backed by the fortune of the Ellison family.
The initial bid is reported to be an offer for around $20 per share, and while it has been rebuffed, talks are still ongoing. Per Bloomberg, Paramount has had discussions with Apollo Global Management about potentially infusing more resources into the bid. Those talks have included Legendary Entertainment, the independent production house majority owned by Apollo.
There are other options available to the Ellisons if they really want WBD. They could go directly to shareholders in a hostile takeover attempt, or they could seek other ways to beef up their offer. Whichever way they decide to go, it appears the issue is far from closed.
Paramount wants to acquire all of WBD, which earlier this year announced plans to split into two companies — one focused on streaming and the Warner Bros. movie studio, the other on WBD-owned cable channels. Bank of America analyst Jessica Reif-Ehrlich was an early advocate of that move and thinks that moving ahead with that plan would be better for WBD in the long run.
“It is our view that as a standalone entity WBD’s streaming and studio assets would generate a bidding war amongst potential buyers, and therefore, we believe a split of the company can garner the greatest potential value,” she wrote in a Sept. 30 note.
Now, it falls to WBD CEO David Zaslav to navigate the next few months with care. Zaslav’s desire for a bidding war may lead him to bide his time, but if he gets a compelling enough second offer from Paramount, he might not be able to hold back. The Ellisons would do well to make every attempt to convince Zas that he won’t be foregoing any major windfalls by teaming with them.
Will Comcast, Netflix, or another company that previously had reported interest in WBD get back in the race now? It remains to be seen, but Paramount would probably do well to get its second bid to Zaslav soon if it wants to remain the only interested party in the race.
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