Paramount tries to derail Netflix’s WBD deal with $108bn cash offer direct to shareholders

Paramount is not giving up its fight to take over Warner Bros Discovery (WBD), pitching an all-cash offer to the company’s shareholders backed by the Ellison family and RedBird Capital.

David Ellison

The game appeared to be up for Skydance-backed Paramount on Friday when Netflix entered a definitive agreement to acquire WBD’s studio and streaming assets for US$82.7bn.

However, Paramount hit back as markets opened on the east coast this morning with an all-cash offer valued at US$30 a share (US$108.4bn in total), which it said provides superior value to shareholders and a more certain, quicker path to completion. President Donald Trump has already described the Netflix tie-up as a potential problem for competition authorities.

The equity will be backstopped by the Ellison family and RedBird Capital in addition to debt fully committed by Bank of America, Citi and Apollo.

Paramount said this morning it felt obligated to take the offer directly to WBD shareholders over concerns they were not presented with the “most compelling and superior transaction.”

It said the Netflix deal provides WBD shareholders with “inferior and uncertain value, a protracted and uncertain multi-jurisdictional regulatory clearance process, a complex and volatile mix of equity and cash, and ownership of Global Networks as a standalone over-leveraged company whose future trading value is uncertain.”

Paramount’s proposed transaction is for the entirety of WBD, including the Global Networks segment, and it said it would provide shareholders US$18bn more in cash than the Netflix bid.

David Ellison, chairman and CEO of Paramount, said: “WBD shareholders deserve an opportunity to consider our superior all-cash offer for their shares in the entire company. Our public offer, which is on the same terms we provided to the Warner Bros Discovery board of directors in private, provides superior value and a more certain and quicker path to completion.

“We believe the WBD board of directors is pursuing an inferior proposal which exposes shareholders to a mix of cash and stock, an uncertain future trading value of the Global Networks linear cable business and a challenging regulatory approval process. We are taking our offer directly to shareholders to give them the opportunity to act in their own best interests and maximise the value of their shares.”

Paramount accused WBD of “never engaging meaningfully with these proposals, which we believe deliver the best outcome for WBD shareholders” despite six bids being submitted over the course of 12 weeks.

Ellison continued: “We believe our offer will create a stronger Hollywood. It is in the best interests of the creative community, consumers and the movie theatre industry. We believe they will benefit from the enhanced competition, higher content spend and theatrical release output, and a greater number of movies in theatres as a result of our proposed transaction. We look forward to working to expeditiously deliver this opportunity so that all stakeholders can begin to capitalise on the benefits of the combined company.”

The company has launched a website detailing its rival offer at www.StrongerHollywood.com.