Warner Bros Discovery’s board has rejected Paramount Skydance’s $108.4bn hostile takeover bid and accused the studio giant of misleading shareholders about its financing.
In a letter to shareholders on December 17, the Warner Bros board wrote that Paramount “consistently misled” Warner Bros shareholders that its $30-per-share cash offer was fully guaranteed, or “backstopped”, by the Ellison family, led by billionaire Oracle cofounder Larry Ellison, whose son David runs Paramount Skydance.
Paramount has been in a race with Netflix to win control of Warner Bros and its prized film and television studios, HBO Max streaming service and franchises like Harry Potter. After Warner Bros accepted the streaming giant’s offer, Paramount launched a hostile offer to outdo that bid.
“It does not, and never has,” the board wrote of the guarantee of Paramount’s offer, noting that the offer posed “numerous, significant risks”.
The board said it found Paramount’s offer “inferior” to Netflix’s $27.75 per share offer, which is a binding agreement that requires no equity financing and has robust debt commitments, the board wrote.
The board also said the offer could be terminated or amended at any time before the deal’s completion, which is not the same as a binding merger agreement.
Warner Bros has not yet set a date for a shareholder vote on the deal, but it is expected to happen sometime in spring or early summer, its chairman, Samuel Di Piazza, said in an interview with CNBC.
The Ellisons have cited their relationship with United States President Donald Trump as a reason why the deal would face an easier regulatory path.
“The Warner Bros Discovery Board reinforced that Netflix’s merger agreement is superior and that our acquisition is in the best interest of stockholders,” its co-CEO Ted Sarandos said in a statement.
Netflix is already talking with the US Department of Justice and the European Commission, its other co-CEO, Greg Peters, told CNBC while expressing confidence in how regulators would view the deal.
Netflix has told Warner Bros it would keep releasing the studio’s films in cinemas in a bid to ease fears that the deal would eliminate another studio and major source of theatrical films, according to people familiar with the matter.
(AlJazeera)
