Warner Bros. Discovery rejects Paramount’s latest takeover bid
Warner Bros. Discovery rejects Paramount’s latest takeover bid
WBD has initiated a strategic review process after receiving unsolicited bids, while Paramount heads back to the drawing board.
The Paramount Skydance efforts to take over Warner Bros. Discovery aren’t exactly going as planned. Paramount has already seen one offer to buy WBD rejected, and things didn’t go much better with its second attempt. A new offer to purchase WBD has been officially declined, and Paramount may be seeing its chances to acquire the legacy media company fade away.
Key Details:
- Not sweet enough: Paramount boosted its offer to WBD by $4 per share in its second offer, to no avail.
- Considering options: WBD has started a strategic review after receiving what it calls unsolicited offers.
- Still a no from Netflix: Netflix is still unlikely to show any interest in WBD as a whole company.
News that Paramount wants to acquire WBD was first reported in early September, and its initial offer for the company came in at $20 per share. That bid was rejected, despite the stock price at the time being around $18. For its second attempt, Paramount improved its bid to $24 per share.
WBD says it has received several unsolicited offers to purchase at least some of its assets, and says it is now beginning a strategic review process in order to assess its options. That announcement was made on Wednesday, just minutes after the company announced that it would be raising the price for all tiers of its flagship streaming service HBO Max. While this strategic review will undoubtedly look at all options, it ultimately could be intended to spur Paramount to make a bigger offer.
WBD CEO David Zaslav has said he wants to boost the WBD stock price to $40 per share, so Paramount may have to make a substantially larger effort in its next bid to help fulfill those ambitions. Paramount still has the option of a hostile takeover in its back pocket, but WBD fielding other offers muddies the waters, at the very least.
Netflix still shouldn’t be expected to make a major play for the entirety of WBD, which is what Paramount reportedly wants. On Tuesday, Netflix co-CEO Ted Sarandos repeated during the company’s quarterly earnings report that it had traditionally been a builder rather than a buyer, and that it has “no interest in owning legacy media networks.”
Sarandos’s CEO partner Greg Peters used essentially the same language when asked about WBD earlier this month. It all adds up to Netflix being highly unlikely to buy 100% of WBD as Paramount wants to — though if and when WBD splits itself into two companies as planned, Netflix could still show interest in the segment that contains HBO Max and the Warner Bros. movie studio.
Paramount now has to decide how far it wants to go in its pursuit of WBD. Another bid could be coming soon, or the company could decide to go directly to large shareholders and attempt to accumulate enough shares to obtain a majority. The Ellison family didn’t amass the fortune it has by giving up on wanted assets, but there is also the possibility that the price climbs too high as other parties circle WBD, which has made no secret of its desire to start a bidding war.
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