WBD Board Ready to Reject Paramount’s Latest Offer
The board of directors of Warner Bros. Discovery is on the verge of rejecting Paramount Skydance’s amended takeover bid last week, as David Ellison continues his search for the assets he sees as crucial to building a Hollywood heavyweight in the 21st century.
Bloomberg News reported Tuesday that WBD’s board was expected to reject the amended offer made with much fanfare on December 22 by Paramount Skydance. WBD has already agreed to merge with Netflix in a deal worth more than $80 billion.
But Paramount Skydance hasn’t given up and is making an offer to WBD shareholders. While this tug-of-war has played out in press releases, conference calls and filings with the Securities and Exchange Commission, WBD shares are up more than 170% this year even as the shares have been at a low ebb after trading below $10 for most of 2024. Bloomberg reported that the WBD board will meet next week to formally vote on a response to Paramount’s latest offer. A WBD representative declined to comment on the matter.
The WBD board’s expected decision is not a surprise, as there are no signs of a significant change in the panel’s thinking about which company is best at Warner Bros. and HBO Max fits. There is also a lot of industry intrigue about how far, if at all, Paramount is willing to go in increasing the financial value of its offer above the existing $30 per share.
Paramount’s amended offer last week largely involved financing the transaction in cash. Software billionaire Larry Ellison, David Ellison’s father, has taken steps to address WBD’s concerns about Paramount’s funding sources. Larry Ellison is increasing his personal stake in the transaction by providing an “irrevocable personal guarantee of $40.4 billion” for Paramount’s $108 billion cash offer for all of WBD. That includes CNN, TNT and a handful of other established linear cable channels that are now on track to be spun off into a separate company next year.
Paramount’s December 22 amended offer also increased the breakup consideration to Netflix’s amount of $5.8 billion, payable to WBD in the event the deal is not reviewed by the regulator. Netflix’s deal is valued at just under $83 billion but does not include its linear cable channels. Netflix’s deal is a mix of cash and stock.
If the expected rejection from the WBD board prompts Paramount to increase its offer, the ball will go to Netflix’s court. It is unclear what willingness Netflix has to raise its hand.
