Paramount Bids $108.4B for Warner Bros. Discovery

Paramount Skydance Launches Hostile Bid for Warner Bros. Discovery

Paramount Skydance initiated a hostile takeover attempt on Monday, proposing a $108.4 billion bid for Warner Bros. Discovery (WBD). This move follows closely after Warner agreed to be acquired by Netflix in a deal valued at $82.7 billion.

Details of the Paramount Offer

Paramount is directly approaching WBD’s shareholders with an all-cash offer of $30 per share. The company emphasizes that its proposal would deliver $18 billion more in cash to shareholders compared to the Netflix agreement.

The Netflix deal consisted of $23.25 in cash alongside $4.50 in Netflix shares, totaling $27.75 per share.

Scope of the Bids

A key difference lies in the scope of each bid. Paramount is seeking to acquire all of WBD, whereas Netflix’s offer is limited to WBD’s Hollywood studios and streaming operations.

Reports from CNBC indicate that these precise terms were previously presented by Paramount to the WBD board but were rejected just a week prior.

Paramount CEO's Statement

David Ellison, CEO of Paramount, released a statement asserting that the WBD board is pursuing a less favorable agreement. He highlighted the risks associated with the Netflix deal, including a combination of cash and stock, the uncertain value of the Global Networks linear cable business, and potential regulatory hurdles.

Financial Backing for Paramount's Bid

Paramount’s offer is financially supported by equity financing from the Ellison family and RedBird Capital. Additionally, the company has secured $54 billion in debt commitments from Bank of America, Citi, and Apollo.

Ongoing Battle for Hollywood Studio

Netflix emerged victorious in a bidding war against Paramount and Comcast on Friday. However, Paramount’s hostile bid is expected to prolong the competition for one of Hollywood’s most prominent studios, a struggle that has been unfolding for several months.

Antitrust Concerns

The proposed deal between Netflix and WBD has already sparked antitrust scrutiny, as it would consolidate two major streaming platforms. Furthermore, former President Donald Trump has suggested the deal “could be a problem” due to the combined companies’ substantial market share.

A potential agreement between WBD and Paramount would likely face similar regulatory challenges.

Break-Up Fees

As part of the agreement, Netflix is obligated to pay WBD $5.8 billion if the deal fails to materialize. Conversely, WBD would be required to pay Netflix $2.8 billion if it chooses to terminate the agreement.

Netflix has not yet issued a response to requests for comment regarding Paramount’s bid.