Warner Bros. Discovery has once again rejected the acquisition offer from Paramount Skydance, opting to stick with their deal with Netflix. This decision comes after Paramount’s eighth bid of $30 per share in all-cash for the entire company was turned down by WBD.
In an official response to Paramount’s latest offer, WBD stated that the proposal was not more favorable to their stockholders compared to the Netflix merger. The board cited insufficient value, risks, costs, and uncertainties as reasons for declining Paramount’s bid. They also raised concerns about Paramount’s ability to close the deal, noting that the offer is nonbinding and subject to change at any time.
This latest rejection follows a pattern of rebuffs from WBD towards Paramount Skydance’s takeover attempts. The board has consistently favored the Netflix deal, which they believe offers more stability and value. They highlighted the differences between the two companies, with Netflix having a larger market capitalization, investment grade balance sheet, and estimated free cash flow.
Paramount’s updated offer included a personal guarantee from Larry Ellison, but WBD remained unconvinced. They pointed out that accepting Paramount’s offer would result in significant costs for WBD shareholders, including termination fees and financing expenses. The board expressed doubts about Paramount’s financial position and ability to secure the necessary funding for the acquisition.
In contrast, the board emphasized the benefits of the Netflix merger, which includes a mix of cash and stock, ownership in Discovery Global, and strategic flexibility. They believe that the Netflix deal provides a more solid foundation for WBD’s future growth and success.
In a letter to shareholders, the WBD board urged them not to tender their shares into Paramount’s offer. They outlined the reasons for their decision, including the inadequate value offered by Paramount, uncertainties surrounding the deal, and potential risks for shareholders if the acquisition does not go through.
Overall, Warner Bros. Discovery remains committed to the merger with Netflix and is focused on delivering value to their shareholders through this partnership. The board believes that the Netflix deal is the best option for the company and its stakeholders, emphasizing the importance of long-term strategic planning and value creation.
