Warner Bros. Discovery Rejects Paramount Bid, Calls Offer 'Illusory'

Warner Bros. Discovery Rejects Paramount Skydance Bid

The board of directors at Warner Bros. Discovery (WBD) has turned down the $108 billion unsolicited takeover attempt launched by David Ellison’s Paramount Skydance. The offer was characterized as “illusory” by the board.

WBD alleges that Paramount provided misleading information to its shareholders regarding the financial backing of the proposed deal. Specifically, concerns were raised about the security of the funding.

Dispute Over Financing

According to WBD, Paramount misrepresented the extent of financial guarantees from the Ellison family. The board stated that a supposed “full backstop” from the Ellisons simply does not exist.

The letter to shareholders explicitly states that Paramount “has consistently misled WBD shareholders” concerning the availability of guaranteed funding.

Preference for Netflix Merger

WBD’s board maintains that the existing agreement to merge with Netflix represents a more favorable outcome for stockholders. They consider the Paramount offer to be “inferior.”

Netflix’s offer, valued at $27.75 per share for Warner Bros.’ studios and streaming services, is a legally binding agreement. It includes firm commitments and doesn't require additional equity financing.

Netflix has secured robust debt commitments to finalize the acquisition.

Netflix Response

Netflix expressed approval of WBD’s decision. Ted Sarandos, co-CEO of Netflix, affirmed that the WBD board’s action validates the superiority of their merger agreement.

Sarandos stated that the acquisition is demonstrably in the best interests of WBD’s stockholders.

Next Steps for Paramount

Paramount, along with its supporters – including Larry Ellison, David Ellison’s father – are currently evaluating WBD’s rejection. They will decide whether to revise their offer and increase its value, as reported by Variety.

A potential increase in the bid remains a possibility as the situation develops.