Paramount embarks on hostile takeover attempt of WBD
Paramount embarks on hostile takeover attempt of WBD
Netflix still has a fight on its hands with Paramount, which does not want to give up its pursuit of WBD’s assets just yet.
Lest anyone thought that Paramount Skydance would simply accept Warner Bros. Discovery’s decision to sell its streaming and studio assets to Netflix and walk away from the table, that belief is now officially quashed. On Monday, Paramount announced that it was launching a hostile takeover attempt of WBD, bringing an all-cash offer directly to shareholders.
Key Details:
- No more games: Paramount is taking its next offer to purchase WBD directly to the company’s shareholders.
- Clear purpose: In its release announcing the takeover attempt, Paramount said Netflix’s offer provides “inferior and uncertain value.”
- Multi-faceted: Paramount argues that its new offer is better for shareholders and consumers, and has a better chance of regulatory approval.
In its announcement of a new bid, Paramount says it is offering $30 per share for WBD, all in cash. Its offer is backstopped by funds from the Ellison family and RedBird Capital, with debt fully committed by Bank of America, Citi, and Apollo Global Management. The Netflix bid that was ultimately selected by WBD came in at $27.75 per share.
The offer is being presented directly to WBD shareholders, as the company’s board has already rejected several bids from Paramount to acquire its assets. The announcement of the new takeover attempt predictably extolls the virtues of the Paramount bid and castigates the Netflix offer as inferior and less likely to be approved by regulators.
Paramount CEO David Ellison used both arguments in a statement as to why WBD shareholders should consider this latest deal offer.
“WBD shareholders deserve an opportunity to consider our superior all-cash offer for their shares in the entire company. Our public offer, which is on the same terms we provided to the Warner Bros. Discovery Board of Directors in private, provides superior value, and a more certain and quicker path to completion. We believe the WBD Board of Directors is pursuing an inferior proposal which exposes shareholders to a mix of cash and stock, an uncertain future trading value of the Global Networks linear cable business and a challenging regulatory approval process. We are taking our offer directly to shareholders to give them the opportunity to act in their own best interests and maximize the value of their shares.”
Paramount entered the bidding process for WBD as the odds-on favorite to win the auction, but as the weeks progressed, Netflix gained more and more momentum. Paramount was thought to have President Trump — and the regulators in his employ — firmly in its camp thanks to the close relationship between Trump and David Ellison’s billionaire father, Larry, but Netflix has been wooing the president to try and win his favor as well. Last week, Paramount raised its proposed breakup fee to try and sweeten its latest offer to WBD.
All we know for certain at the moment is that the ultimate purchaser of WBD is still very much undecided. Netflix has been selected as the official winner of the auction process, but now Paramount is making its play to acquire WBD by going directly to shareholders with a new offer.
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