Paramount, Skydance Extend Deadline for Warner Bros Takeover Offer

Bassyonni

ago 4 hours

Paramount, Skydance Extend Deadline for Warner Bros Takeover Offer

David Ellison continues to pursue Warner Bros. Discovery shareholders for support of Paramount Skydance’s acquisition offer. This bid competes with Netflix’s agreement to acquire Warner Bros. Discovery. However, the Ellisons have not indicated a willingness to increase their financial commitment in this merger and acquisition (M&A) competition.

Extension of Deadline for Paramount Skydance’s Offer

On Thursday, Paramount Skydance announced an extension for its $30 per share all-cash offer for Warner Bros. Discovery (WBD) until February 20, following the expiration of the previous tender offer on January 21. Paramount aims to encourage WBD shareholders to reject Netflix’s deal during an upcoming shareholders meeting scheduled for April.

Paramount vs. Netflix: Competing Offers

Paramount argues its proposition values WBD at approximately $108.4 billion, which it claims is significantly higher than Netflix’s $82.7 billion valuation. Paramount’s statement urged WBD shareholders to express their preference by tendering their shares to the board.

In contrast, Warner Bros. Discovery has reported that over 93% of its shareholders have rejected Paramount’s bid in favor of the Netflix merger. The WBD board unanimously endorsed the Netflix agreement, which has been refined to an all-cash offer valued at $83 billion. This change serves to counter Paramount’s argument that an all-cash offer benefits WBD shareholders more.

Details of the Netflix Agreement

The deal between Netflix and Warner Bros. Discovery is expected to wrap up within 12 to 18 months, contingent upon regulatory approvals and shareholder consent. It follows WBD’s planned separation of Discovery Global and various cable networks, including CNN and TNT.

Legal Actions and Financial Claims

Paramount has taken legal steps against WBD’s board, demanding the disclosure of financial assessments related to Discovery Global. Their lawsuit contends that WBD has overestimated the value of this subsidiary. Paramount presents an analysis suggesting that shares in Discovery Global might hold no real value.

Discovery Global Valuation Insights

WBD estimates Discovery Global’s equity value between $2.41 and $3.77 per share.
In a potential acquisition context, this value could range from $4.63 to $6.86 per share.
Paramount claims WBD has not disclosed essential information regarding this valuation.

Debt Assignments and Regulatory Challenges

Warner Bros. Discovery has projected a net debt of $17 billion with plans for gradual reductions. Meanwhile, Netflix’s proposal indicates it would bear $10.7 billion of Warner Bros. net debt while also leveraging $20 billion in cash and $52 billion in debt financing.

Paramount emphasizes regulatory hurdles for Netflix, particularly in Europe, where it dominates the streaming market. Such dominance could lead to increased prices for consumers and potential detriment to content creators.

Implicit Market Effects

In a statement, Netflix executives asserted their confidence in securing regulatory approvals, framing the acquisition as beneficial to consumers and creators alike. They also noted that despite the acquisition, their projected market share would remain under YouTube and a possible Paramount/WBD merger.

As the competition progresses, the landscape of merger and acquisition activity in the entertainment sector continues to evolve, underscoring the complexities involved in large-scale transactions.