Warner Bros Discovery Rejects Paramount’s $108 Billion Bid As Netflix Moves Forward For Takeover: What We Know

A hostile bid of Paramount Skydance of 108.4 billion was rejected by the board of Warner Bros Discovery on Wednesday, December 17, based on a lack of financial guarantees.

The board, in a formal letter to shareholders, was displeased with the allegation by Paramount that its cash offer was guaranteed by the support of the Ellison family.

Warner Bros Says No to Paramount’s $108 Billion Hostile Bid

The board of Warner Bros underscored the many risks in the offer of Paramount by saying that it is not fully supported and it is very dangerous in terms of financial risks.

The board, as per reports, preferred the more secure offer of Netflix compared to that of Paramount, as it did not require equity financing requirements and had a strong debt obligation.

Paramount, which had relentlessly sought a deal, offered a different financing structure which was supported by its Ellison Revocable Trust.

But it was not enough to convince Warner Bros, whose only response was the opaque character of the trust and the possibility of pulling out the assets, which sent them back to questioning the financial strength and creditworthiness of Paramount.

After a thorough assessment of the recently announced tender offer by Paramount, the Board determined that the price offered in the offer is low, wherein the risks and costs incurred on our shareholders are high. Samuel A. Di Piazza, Jr., who is the chair of the board of directors of Warner Bros. Discovery, said.

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The official statement also said, “This proposal again does not reflect on vital issues that we have been communicating to Paramount during our long-time interaction and assessment of their 6 prior offers. We are sure that our combination with Netflix would be better and more sure value to our stockholders and we are eager to deliver the benefits of our combination which are compelling.”

This rejection letter comes after Affinity Partners, headed by the son-in-law of Donald Trump, Jared Kushner withdrew its support of the bid by Paramount.

On December 5, Netflix affirmed that it was buying Warner Bros at a price of 82.7bn, under which Netflix will acquire Warner Bros, its film and television studios, HBO Max and HBO but not Discovery Global. It was a cash and stock deal, which was priced at 27.75 per WBD share with an enterprise value in the order of 82.7bn (equity value 72bn).

On 8 December, Paramount approached the shareholders of WBD with its hostile all-cash bid to buy all the company at a price of 30 a share that provided the target with a valuation of 108bn.

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