Warner Bros. Rejects Paramount's Takeover Bid, Endorses Netflix Offer

Warner Bros. Discovery's board has unanimously rejected Paramount's $77.9 billion hostile takeover bid, advising shareholders to support a competing $72 billion offer from Netflix.

"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," said Warner Bros. Discovery Chair Samuel Di Piazza Jr.

In contrast, the board views the agreement with Netflix as offering superior value with greater certainty.

Paramount's proposal includes an all-cash bid of $30 per share, higher than Netflix's $27.75 per share valuation. However, Warner Bros. Discovery's board favors Netflix's cash-and-stock offer, considering it more stable and beneficial for stakeholders.

Late last month, Paramount announced an "irrevocable personal guarantee" from Oracle founder Larry Ellison to back $40.4 billion in equity financing for the company's ... Paramount also increased its promised payout ... .

Warner Bros. Discovery's board expressed concerns about Paramount's offer, considering it a leveraged buyout with significant debt and operating restrictions that could hinder the company's performance during the transaction.

The competing bids differ in scope: Netflix seeks to acquire Warner's studio and streaming assets, including HBO Max, while Paramount aims to purchase the entire company, encompassing networks like CNN and Discovery.

Both potential mergers are expected to face substantial antitrust scrutiny, potentially delaying closure by over a year. Trade groups have raised concerns about the impact of either deal on the entertainment industry, citing potential job losses and reduced diversity in filmmaking.

Warner Bros. Discovery shareholders have until January 21 to tender their shares.