Paramount sweetens hostile WBD bid but keeps overall offer at $30 per share
Ted Sarandos (left) and David Ellison
David Ellison’s Paramount is upping the ante in its hostile bid for Warner Bros Discovery (WBD), promising a 25¢-per-share quarterly increase on its US$30 offer if the deal doesn’t close by December 31, 2026.
The company on Tuesday announced several new provisions in its bid to unseat Netflix’s US$82.7bn definitive agreement to buy WBD’s studio and streaming assets.
In addition to the 25¢-per-quarter increase, which would equate to about US$650m each quarter, Paramount also said it would fund Netflix’s US$2.8bn termination fee, as well as covering a potential US$1.5bn debt refinancing cost.
Paramount said the “enhanced” offer – which does not raise the overall offer price – underscores its “confidence in the speed and certainty of regulatory approval for its transaction.” The company also said it had complied with the Department of Justice (DoJ)’s second request for information related to Paramount’s tender offer.
Last month, the company extended the deadline for WBD stockholders to tender their shares until February.
Paramount launched its hostile bid just days after Netflix and WBD confirmed their deal, with Oracle founder Larry Ellison, who is among the world’s richest people, committing to backstopping more than US$40bn in equity financing.
The offer also includes US$54bn in debt commitments from Bank of America, Citigroup and Apollo. However, WBD has largely been dismissive of Paramount’s offer, claiming it is inferior to Netflix’s and questioning the validity of the financing plan.
While WBD confirmed receipt of Paramount’s updated bid, it is unclear whether it will compel its board to engage with Ellison’s offer.
Netflix last month switched its own deal to an all-cash offer of US$27.75bn, whereas before it was a mix of primarily cash and some stock. Netflix’s stock has tanked by more than 30% since its interest in WBD was first reported in October.
The race to acquire WBD is being waged in both the US and Europe, with David Ellison last week sending an open letter to the UK creative community in which he called the WBD/Netflix tie-up “monopolistic” and claiming Paramount’s offer provides greater choice and more meaningful competition.
In December, Paramount claimed Netflix’s takeover bid represented a “blatant attempt to eliminate” an international streaming competitor in HBO Max. For its part, Netflix has indicated that it plans to keep HBO Max as a separate entity.
The streaming giant has been engaging with both the DoJ and the European Commission for at least a month. It previously said it believes the process to get its deal approved would take between 12 and 18 months.
Last week, Netflix co-CEO Ted Sarandos faced questions from a senate committee about the potential antitrust concerns related to a Netflix/WBD combination.
During the hearing, in which some senators accused Netflix of spreading a “transgender ideology” and commissioning content that is “overwhelmingly woke,” Sarandos pushed back on the notion that the deal is anti-competitive, claiming it would in fact “strengthen” the entertainment economy.
