NEW YORK (AP) — Warner Bros. again rejected a takeover bid from Paramount on Wednesday and told shareholders to stick with a rival offer from Netflix.
Warner’s leadership has repeatedly rebuffed overtures from Skydance’s Paramount unit and weeks ago urged shareholders to support a $72 billion sale of its streaming and studio businesses to Netflix. At the same time, Paramount raised its bid for the entire company to $77.9 billion and made a hostile takeover directly to shareholders.
Warner Bros. Discovery said Wednesday its board of directors believes Paramount’s takeover bid is not in the best interest of the company or its shareholders. It again recommended shareholders support the Netflix deal.
“Paramount’s offer continues to not provide sufficient value and includes provisions such as significant debt financing that creates closing risks and a lack of protection for our shareholders if the deal does not close,” Samuel Di Piazza Jr., chairman of Warner Bros. Discovery, said in a statement. “Our binding agreement with Netflix will provide superior value with greater certainty, and Paramount’s offer does not impose significant risks and costs on our shareholders.”
Paramount did not immediately respond to a request for comment.
Late last month, Paramount announced that Oracle founder Larry Ellison (father of Paramount CEO David Ellison) provided an “irrevocable personal guarantee” to provide $40.4 billion in equity financing for the company’s takeover bid. Paramount has also increased its commitment to pay shareholders to $5.8 billion if the deal is blocked by regulators, matching the amount Netflix has already offered.
In a letter to shareholders, Warner expressed concerns about a possible deal with Paramount. The company said it considers the takeover offer to be essentially a leveraged buyout, which includes a significant amount of debt and could take 12 to 18 months to close.
The battle for Warner and the value of each offer is complicated by the fact that Netflix and Paramount want different things. Netflix’s proposed acquisition only includes Warner’s studio and streaming operations, including its traditional TV and film production divisions and platforms such as HBO Max. But Paramount wants the entire company — including networks like CNN and Discovery in addition to studios and streamers.
If Netflix is successful, Warner’s news and cable businesses will be spun off into their own companies under previously announced spinoffs.
A merger with either company would attract huge antitrust scrutiny. Because of its size and potential impact, it will almost certainly trigger scrutiny from the U.S. Department of Justice, which could sue to block the deal or require changes. Regulators in other countries and overseas may also challenge the merger.
