Warner Bros. Discovery Board Rejects Paramount's Revised Takeover Bid, Reaffirms Netflix Merger

Warner Bros. Discovery's board of directors has unanimously rejected Paramount Skydance's revised $108.4 billion takeover bid, reaffirming its commitment to the existing merger agreement with Netflix. The board cited concerns over the substantial debt financing required for Paramount's proposal, labeling it a "leveraged buyout" that could burden the company with $87 billion in debt.

In a letter to shareholders, the board emphasized that 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."

Paramount's bid, which includes a $40 billion personal guarantee from Oracle co-founder Larry Ellison, aims to acquire all of Warner Bros. Discovery. Despite this, the board remains steadfast in its support for the Netflix merger, viewing it as offering superior value with greater certainty.

The Netflix deal, valued at $82.7 billion, involves acquiring Warner Bros. Discovery's studio and streaming assets, excluding its cable networks. The transaction is expected to close within 12 to 18 months, following the separation of Warner Bros. Discovery's cable operations.

Paramount has set a January 21 deadline for its tender offer, urging Warner Bros. Discovery shareholders to sell their shares. However, the board continues to recommend that shareholders reject Paramount's overtures in favor of the Netflix merger.