Paramount sues WBD in latest escalation over merger talks
Paramount sues WBD in latest escalation over merger talks
In addition to the suit, Paramount is getting ready to instigate a proxy fight for Warner Bros. Discovery.
Paramount Skydance is not going to leave any stone unturned as it seeks to purchase Warner Bros. Discovery. After losing an auction process that saw WBD opt to sell its streaming and studio components to Netflix in a deal worth over $80 billion, Paramount has attempted to sway current WBD investors with a series of letters designed to persuade them that its offer is actually superior. Paramount took the next steps in its dogged pursuit this week, launching a lawsuit to force greater disclosure of details regarding the Netflix deal, and readying to engage in a proxy fight for WBD if all else fails.
Key Details:
- Tell it to a judge: Paramount is suing WBD for greater financial disclosure of the Netflix deal.
- Out and in: Paramount is also assembling its own board of directors for WBD that would be more favorable to its offer.
- Unconvinced: Thus far, WBD has rejected every overture and purchase attempt from Paramount.
On Monday, Paramount published a letter revealing that it was suing Warner Bros. Discovery over its agreement with Netflix. The suit seeks to compel WBD to disclose to its investors more information about the deal, saying that WBD failed to provide a host of details regarding how it came to the decision that Netflix’s offer is superior.
“We filed suit this morning in Delaware Chancery Court to ask the court to simply direct WBD to provide this information so that WBD shareholders have what they need to be able to make an informed decision as to whether to tender their shares into our offer,” the letter states.
WBD has already fired back, issuing a statement calling the lawsuit “meritless” and insisting that Paramount still has not raised the price of its offer or adjusted it to smooth over any deficiencies since the acceptance of the Netflix deal. Instead, it says Paramount is seeking to “distract” investors and observers while it tries to put forward an inferior deal.
The lawsuit isn’t the only card Paramount is prepared to play. The company says it is also assembling a new board of directors for WBD, which would be put up for election at the annual meeting and would block approval of the Netflix deal if they were selected by the company’s investors.
Whether such a maneuver has a chance of success is hard to say. Paramount has already made several direct overtures to WBD shareholders as it pursues a hostile takeover attempt, but so far, it has made little headway.
WBD first accepted an offer worth over $27 per share for its streaming and studio segments from Netflix in early December. Ever since, it has steadfastly maintained that Paramount’s $30-per-share offer for the entirety of WBD is an inferior bid and that it is in the best interest of investors to rebuff Paramount.
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