Warner Bros. Discovery Board of Directors for the second time voted unanimously Wednesday to reject Paramount’s latest offer to buy them and reiterated its recommendation in support of the Netflix offer of $82.7 billion.
The Board said following the vote, and it’s decision to reject Paramount, it immediately sent a letter to Warner Bros. Discovery shareholders providing details on its recommendation.
“The Board unanimously determined that the Paramount’s latest offer remains inferior to our merger agreement with Netflix across multiple key areas,” said Samuel A. Di Piazza, Jr., Chair of the Warner Bros. Discovery Board of Directors. “Paramount’s offer continues to provide insufficient value, including terms such as an extraordinary amount of debt financing that create risks to close and lack of protections for our shareholders if a transaction is not completed. Our binding agreement with Netflix will offer superior value at greater levels of certainty, without the significant risks and costs Paramount*s offer would impose on our shareholders.”
Paramount Skydance Corp. amended its first offer on Dec. 22, making changes to its $30 per share all-cash offer of Dec. 8, for Warner Bros. Discovery, Inc. in an attempt to address WBD’s stated concerns regarding that initial offer.
Warner Bros. Discovery’s Board of Directors unanimously rejected Paramount’s first offer on Dec. 17.
In the amended offer, Larry Ellison, a co-founder of the technology company Oracle and controlling shareholder of Paramount, has agreed to provide an irrevocable personal guarantee of $40.4 billion of the equity financing for the offer and any damages claims against Paramount.
Ellison has agreed not to revoke the Ellison family trust or adversely transfer its assets during the pendency of the transaction.
To match the pending transaction, Paramount will increase its regulatory reverse termination fee from $5 billion to $5.8 billion.
Paramount’s direct wholly owned subsidiary, Prince Sub Inc. extended the expiration date of the tender offer to 5 p.m. Eastern Standard Time on Jan. 21, unless further extended.
David Ellison, Paramount’s chairman and CEO and the son of Larry Ellison, said in a statement, “Paramount has repeatedly demonstrated its commitment to acquiring WBD. Our $30 per share, fully financed all-cash offer was on December 4th, and continues to be, the superior option to maximize value for WBD shareholders.
“Because of our commitment to investment and growth, our acquisition will be superior for all WBD stakeholders, as a catalyst for greater content production, greater theatrical output, and more consumer choice.
“We expect the board of directors of WBD to take the necessary steps to secure this value-enhancing transaction and preserve and strengthen an iconic Hollywood treasure for the future.”
Netflix and Warner Bros. announced their proposed deal that would include Warner’s film and television studios and the HBO and HBO Max brands.
Netflix has more than 300 million subscribers worldwide. With HBO Max folded in, that number would jump past 420 million, giving the company a subscriber base unmatched by any other premium streaming service.
When completed, the deal will make Netflix a Hollywood juggernaut bigger than The Walt Disney Co.
Netflix is offering about $27.75 per Warner Bros. Discovery share in a cash-and-stock deal and will take on more than $10 billion in company debt, putting the transaction’s value at $82.7 billion.