Warner Bros. Discovery Tuesday gave some hope to Paramount Skydance’s long-shot bid to buy the company, giving PSKY until Feb. 23 to submit its “best and final proposal” in a bidding war with Netflix.
The WBD Board of Directors sent a letter to Paramount Chairman David Ellison and Paramount’s board on Tuesday, giving the group seven days to “clarify” its proposal.
Netflix and Paramount have been jockeying for months over the sale of Warner Bros. Discovery’s studios and HBO Max streaming business in a deal closely watched throughout the entertainment industry. WBD still expressed a preference for Netflix’s $82.7-billion, all-cash offer.
Warner Chairman Samuel Di Piazza Jr. issued the following statement Tuesday: “We continue to believe the Netflix merger is in the best interests of WBD shareholders due to the tremendous value it provides, our clear path to achieve regulatory approval and the transaction’s protections for shareholders against downside risk.”
WBD has called a March 20 meeting of its shareholders to decide the matter.
Netflix released the following statement Tuesday morning:
“Throughout the robust and highly competitive strategic review process, Netflix has consistently taken a constructive, responsive approach with WBD, in stark contrast to Paramount Skydance. While we are confident that our transaction provides superior value and certainty, we recognize the ongoing distraction for WBD stockholders and the broader entertainment industry caused by PSKY’s antics. Accordingly, we granted WBD a narrow seven-day waiver of certain obligations under our merger agreement to allow them to engage with PSKY to fully and finally resolve this matter.
“This does not change the fact that we have the only signed, board-recommended agreement with WBD, and ours is the only certain path to delivering value to WBD’s stockholders. In its press release today, WBD reaffirmed its recommendation that WBD stockholders vote to approve the Netflix transaction at WBD’s special meeting.”
Paramount has said that its $30-per-share, all-cash offer “provides superior value and greater regulatory certainty than Netflix’s sliding scale merger consideration which, according to WBD’s own preliminary proxy statement filed with the SEC on February 9, ranges from a minimum of $21.23 to a maximum of $27.75 per share in cash (depending on debt levels on Discovery Global at the time of separation).”
Paramount added a $2.8 billion fee that Warner would have to pay Netflix if the company pulled the plug on that deal. Paramount also added an offer to pay Warner investors 25 cents a share for every quarter after Jan. 1 that the deal does not close.
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.