Netflix is preparing to make its bid for Warner Bros. Discovery’s studios and HBO Max streaming business an all-cash offer, a move that could reshape a high-stakes takeover battle with Paramount, it was reported Tuesday.
Netflix struck a $72 billion cash-and-stock deal with Warner in December, but shifting to an all-cash bid would simplify the transaction and could appeal to shareholders who have been weighing the competing offers, The Wall Street Journal reported Tuesday, citing people familiar with the matter.
Paramount has made a hostile all-cash bid valued at $77.9 billion for Warner and has accused the company of failing to meaningfully engage with its proposal.
On Monday, Paramount escalated the fight by announcing plans to launch a proxy contest for seats on Warner’s board and by filing a lawsuit seeking more information about Warner’s deal with Netflix.
“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.”
Ellison said those details are necessary for shareholders to make an informed decision and that Delaware law requires they be disclosed, adding that Paramount filed a lawsuit in Delaware Chancery Court seeking a court order compelling Warner to provide the information.
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.