Warner Bros. Discovery Denies Paramount’s Hostile Bid, Labels it ‘Illusory’
Warner Bros. Discovery (WBD) has firmly rejected a $108 billion hostile takeover bid from Paramount Skydance, led by David Ellison. The board of directors denounced the offer as “illusory,” citing misleading financing information provided to shareholders by Paramount.
Details of the Rejection
In a letter to shareholders, WBD emphasized its commitment to an existing agreement with Netflix. The board criticized Paramount’s claim of having a “full backstop” from the Ellison family, stating, “It does not, and never has.” This rejection highlights WBD’s priority of honoring its merger agreement with Netflix.
Comparison with Netflix’s Offer
The board pointed out that Paramount’s tender offer is inferior to the Netflix merger. Key points include:
- Netflix’s proposal includes a binding agreement.
- WBD’s deal with Netflix offers enforceable commitments.
- No additional equity financing or dependence on debt commitments is required.
Netflix has welcomed WBD’s decision, reinforcing the notion that their merger is in the best interests of stockholders. Netflix co-CEO Ted Sarandos stated, “The Warner Bros. Discovery board reinforced that Netflix’s merger agreement is superior.”
Next Steps for Paramount
Post-rejection, Paramount and its financial backers, including tech billionaire Larry Ellison, are evaluating their options. Reports suggest they may consider increasing their bid in light of WBD’s refusal.
This situation represents a significant moment in the ongoing competition between major media companies as they vie for position in the evolving entertainment landscape.
