Paramount sued Warner Bros. Discovery Monday in its latest effort to block Warner’s planned purchase by Netflix, contending Warner has not provided complete information about the competing takeover bids to shareholders.
The move comes days after the Warner Bros. Discovery Board of Directors again rejected Paramount’s latest $78 billion effort to purchase the company.
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.
“Along with the WBD shareholders, we have asked for the customary financial disclosure a board is supposed to provide shareholders when making an investment recommendation,” Paramount CEO David Ellison wrote in a letter sent to Warner shareholders Monday. “But in each of its 14D-9 filings, WBD has failed to include any disclosure about how it valued the Global Networks stub equity, how it valued the overall Netflix transaction, how the purchase price reduction for debt works in the Netflix transaction, or even what the basis is for its `risk adjustment’ of our $30 per share all-cash offer.
“WBD shareholders need this information to make an informed investment decision on our offer — and importantly, Delaware law has consistently required that such information be provided to shareholders,” he added. “Following the process prescribed under Delaware law, we filed suit this morning in Delaware Chancery Court to ask the court to simply direct WBD to provide this information so that WBD shareholders have what they need to be able to make an informed decision as to whether to tender their shares into our offer.”
There was no immediate response from Warner Bros. Discovery.
The WBD board last week voted unanimously to reject Paramount’s latest purchase offer, which would include a takeover of the entire company. Netflix’s offer is to purchase WBD but not all of its cable channels. Warner is planning to spin off its cable channels into a separate company.
“The board unanimously determined that the Paramount’s latest offer remains inferior to our merger agreement with Netflix across multiple key areas,” Samuel A. Di Piazza Jr., chair of the WBD board, said in a statement last week. “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 for Warner Bros. Discovery on Dec. 22, making changes to its $30 per share all-cash offer of Dec. 8 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, controlling shareholder of Paramount and David Ellison’s father, 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.