Warner Bros. Discovery’s board of directors spurned Paramount Skydance’s $108.4 billion hostile takeover bid on December 17, calling the offer “illusory” as it accused the studio giant of misleading shareholders about financing. It wrote in a letter to shareholders, disclosed in a regulatory filing, that Paramount had “consistently misled” Warner Bros. shareholders that its $30 per share cash offer was fully guaranteed, or “back-stopped”, by the Ellison family, led by Oracle CEO Larry Ellison. “It does not, and never has,” the board wrote of the guarantee of Paramount’s offer, noting that the offer posed “numerous, significant risks”.
The board said that it found Paramount’s offer “inferior” to the merger agreement with Netflix as the latter’s $27.75 per share offer for Warner Bros.’ film and television studios, its library, and the HBO Max streaming service was a binding deal that required no equity financing and had robust debt commitments.
Warner Bros. has not yet set a date for shareholder vote on the deal but it is likely that it happens in spring or early summer.
It may be mentioned here that Netflix was already engaging with the US department of justice and the European Commission as it was sure that the regulators would view the deal as pro-consumer.
Paramount last week took its case directly to Warner Bros. shareholders, arguing that it had arranged “airtight financing” to support its bid, with $41 billion in new equity assured by the Ellison family and RedBird Capital, and $54 billion of debt commitments. On the other hand, Warner Bros. board countered on December 17 that Paramount’s offer included an equity commitment “for which there is no Ellison family commitment”, but rather the backing of “an opaque” Lawrence J. Ellison Revocable Trust, the assets and liabilities of which were not publicly disclosed.