Warner Bros. Says Paramount’s Latest Bid Still Doesn’t Measure Up
When we last checked in on everyone’s favorite bidding war for one of Hollywood’s entertainment giants, David Ellison’s Paramount had amended its hostile bid for Warner Bros. Discovery to include a $40 billion personal guarantee from Ellison’s megabillionaire dad, Larry. Now that everyone’s back from the holidays, the WBD board has announced that — surprise! — it still prefer that Netflix take control of its company instead.
The board unanimously decided the amended Paramount offer “remains inferior to our merger agreement with Netflix across multiple key areas,” said WBD chairman Samuel A. Di Piazza Jr. in a statement. Paramount’s December 22 offer tweaked the terms to include Ellison’s personal guarantee, matched Paramount’s termination fee to meet Netflix’s number should the deal not go through, and other details, but critically didn’t change the offer price of $30 per share — an all-cash bill of $108 billion for the entirety of the company, inclusive of its streaming, studios, and cable assets. Netflix’s offer stands at $82.7 billion for just the company’s streaming and studios units.
“Paramount’s offer continues to provide insufficient value, including terms such as an extraordinary amount of debt financing that create risks to close and lack of protections for our shareholders if a transaction is not completed,” Di Piazza said. “Our binding agreement with Netflix will offer superior value at greater levels of certainty, without the significant risks and costs Paramount’s offer would impose on our shareholders.”
In a letter to shareholders and an SEC filing, WBD questioned Paramount’s ability to actually lock down all those billions in its offer. “The extraordinary amount of debt financing, as well as other terms of the PSKY offer, heighten the risk of failure to close, particularly when compared to the certainty of the Netflix merger,” the company said, noting PSKY’s $14 billion market cap and the fact that its proposed deal structure, a leveraged buyout, would require “nearly seven times” that number to secure the deal. “To effect the transaction, it intends to incur an extraordinary amount of incremental debt — more than $50 billion — through arrangements with multiple financing partners,” the board wrote. WBD also sniped at Paramount’s trustworthiness as a buyer, “undermined by breaches of its contractual obligations and spurious, multiple threats of litigation,” referring to a New York Post report that Paramount was prepping a “DEFCON 1” lawsuit should WBD reject its bid.
It’s safe to say the Paramount camp would disagree with WBD’s narrative, but it hasn’t responded to this latest rejection yet. What happens next is unclear: Will Paramount raise its bid to sweeten the deal? Will Ellison eventually sue? What will Trump say? Will this saga ever end?! Not for a while still.