Warner Bros. Discovery is opting to stand by its existing agreement with Netflix and has formally rejected Paramount’s $108 billion takeover bid. The decision follows a review by the company’s board, which concluded that Paramount’s offer did not provide the same level of certainty or value for shareholders.
Warner Bros. declines hostile bid from Paramount, provides reasons
Warner Bros. Discovery has formally dismissed Paramount’s unsolicited acquisition proposal, telling shareholders that the offer does not meet the company’s valuation standards and carries substantial risks. In a statement released alongside the decision, the company said the $30-per-share offer led by David Ellison was “inferior” to Warner Bros. Discovery’s existing agreement with Netflix.
“Following a careful evaluation of Paramount’s recently launched tender offer, the Board concluded that the offer’s value is inadequate, with significant risks and costs imposed on our shareholders,” board chair Samuel A. Di Piazza Jr. said in a statement (via The Hollywood Reporter). He added that the bid “once again fails to address key concerns that we have consistently communicated to Paramount throughout our extensive engagement and review of their six previous proposals.”
Warner Bros. Discovery said its decision was largely due to concerns over how the Paramount deal would be financed. Warner Bros. Discovery questioned whether Ellison’s financial backing was secure, citing limited transparency and the possibility that the trust’s assets could change. The company also raised concerns about the involvement of foreign sovereign wealth funds. This includes Saudi Arabia’s Public Investment Fund and investors from Abu Dhabi and Qatar, arguing that such arrangements increase risks.
Addressing the financing issue directly, Di Piazza said on CNBC, “He guaranteed it through an irrevocable trust at the last minute, and frankly, that wasn’t as good as an investment grade company that purported strong value, great response to our concerns of what it took to operate.”
Warner Bros. Discovery also said it does not believe the Paramount proposal offers any regulatory advantage over its existing agreement with Netflix.
Originally reported by Disheeta Maheshwari on ComingSoon.
