WBD board recommends rejection of latest Paramount offer
WBD board recommends rejection of latest Paramount offer
The board continues to steer Warner Bros. Discovery shareholders toward Netflix’s offer for its assets.
Sooner or later, Paramount Skydance may just have to take no for an answer. Until then, however, the company isn’t giving up its efforts to acquire Warner Bros. Discovery by any means necessary. After seeing all offers to the WBD board rejected in favor of a bid from Netflix, Paramount has now embarked on a hostile takeover attempt of WBD. It has made yet another revised offer to WBD shareholders, but on Tuesday, the WBD board of directors informed investors that it unanimously recommended rejecting this latest acquisition attempt.
Key Details:
- Still no: The WBD board has recommended sending back another offer from Paramount Skydance.
- Not enough changes: Paramount made some alterations in the latest bid, but not enough to satisfy WBD.
- Support scarce: Major WBD shareholders have begun signaling they also don’t approve of the Skydance deal.
In a press release announcing that it was recommending denial of the latest Paramount offer, WBD’s board called the bid “inferior to [the] Netflix merger agreement across numerous key areas.” It calls out the “aggressive transaction structure” of the offer, and says it poses much greater risk to shareholders than the accepted Netflix deal.
For its part, Paramount is still offering a price of $30 per share for the entirety of Warner Bros. Discovery, including its cable channels. Just before Christmas, Paramount let it be known that CEO David Ellison’s father, Larry, had agreed to provide a financial backstop for the deal, including $40.4 billion of equity financing.
But the “extraordinary amount of debt financing” that would be required on Paramount’s part to get the deal across the finish line still troubles WBD board members enough to favor the Netflix deal, as they have all along. WBD shareholders could still vote in favor of Paramount’s latest revised offer, but that seems unlikely. In recent weeks, several major WBD investors stated publicly that Paramount had not made an offer superior to Netflix, showing that so far, they are aligned with the board’s thinking.
Paramount is running out of options in its pursuit of WBD, but it hasn’t shown any signs of packing it in yet. However, it appears the company’s latest offer to purchase WBD is likely headed for the same fate as its other attempts to seal the deal.
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