Activist investor urges WBD to shun Netflix deal and ignite new bidding war
Ancora Holdings Group, a private equity firm with a US$200m stake in Warner Bros Discovery (WBD), has gone public with its opposition to Netflix’s acquisition of WBD’s studio and streaming assets for US$82.7bn.
The Cleveland-based firm on Wednesday published a 50-page presentation detailing why it felt Netflix’s US$27.75-per-share definitive agreement, signed in early December, is inferior to Paramount’s offer to buy all of WBD for US$108.4bn, the equivalent of US$30 per share.
Ancora, which is led by chairman and CEO Fred DiSanto, argued WBD’s board is asking shareholders to accept a deal that has an “uncertain” cash consideration due to the unknown value of the WBD cable spin-off, Discovery Global.
It also said WBD’s board is “misleading shareholders” by claiming the Netflix deal has a viable path to regulatory approval and questioned whether “interlocks and questionable connections” between board members were influencing the decision.
The release of the presentation came one day after Paramount once again sweetened its hostile takeover bid for WBD. Under the updated offer, Paramount has added a 25¢-per-share quarterly increase on its US$30 offer if the deal doesn’t close by December 31, 2026. It also promised to fund Netflix’s US$2.8bn termination fee, should a deal between the streaming giant and WBD not come to fruition.
Ancora said WBD’s board must now deem Paramount’s offer as “one that could reasonably be expected to result in a superior proposal,” meaning it could re-engage with Paramount. That, in turn, could lead Paramount to table an offer that WBD deems superior to the existing definitive agreement, at which point Netflix would have the ability to once again improve its offer.
“Assuming the parties can reach an acceptable deal package, Netflix would then have an opportunity to either match, raise or walk under the merger agreement,” said Ancora. “So WBD can make this determination to engage with Paramount without having to terminate the Netflix deal to do so.”
If WBD’s board once again rejects Paramount’s offer outright, Ancora said it will vote no at the annual shareholder meeting, which is expected to happen at some point next month. For its part, WBD on Tuesday said it would review Paramount’s updated offer.
While Ancora’s public opposition to the deal made a splash on Wednesday, it remains to be seen whether it will have an impact on proceedings. It is, in reality, a small shareholder in WBD. However, if it were to win support from other stockholders, it could become a factor ahead of the shareholder vote next month.
At press time, neither WBD, Netflix nor Paramount had responded to Ancora’s statement.
