Paramount hits back with a hostile takeover bid for Warner Bros.
Last week’s big purchase
The talk over the weekend is Netflix’s gigantic acquisition of Warner Bros. Discovery after the two companies reached a sale agreement. Netflix and WB officially announced the purchase with a total enterprise value of approximately $82.7 billion. This would mean beloved franchises, including TV shows and movies such as The Big Bang Theory, The Sopranos, Game of Thrones, The Wizard of Oz and the DC Universe, are set to join Netflix’s extensive portfolio, which includes titles like Wednesday, Money Heist, Bridgerton, Adolescence and Extraction. Many of HBO’s shows have already crossed over to availability on Netflix.
Paramount’s aggressive retaliation
Paramount’s numerous offers had been turned down by David Zaslav, and although the bidding war has seemingly ended, David Ellison and his company aren’t accepting the outcome. According to Deadline, Paramount has now launched a hostile takeover bid for Warners despite their deal with Netflix. Per Deadline, the company “has commenced an all-cash tender offer to acquire all of the outstanding shares of Warner Bros. Discovery for $30 per share in cash, a deal it says equates to an enterprise value of $108.4 billion.”
Paramount has stated, “The Paramount offer for the entirety of WBD provides shareholders $18 billion more in cash than the Netflix consideration. WBD’s Board of Directors recommendation of the Netflix transaction over Paramount’s offer is based on an illusory prospective valuation of Global Networks that is unsupported by the business fundamentals.” The corporation also said in their new proposal, “Paramount’s strategically and financially compelling offer to WBD shareholders provides a superior alternative to the Netflix transaction, which offers inferior and uncertain value and exposes WBD shareholders to a protracted multi-jurisdictional regulatory clearance process with an uncertain outcome along with a complex and volatile mix of equity and cash.”
David Ellison, himself, would state, “WBD shareholders deserve an opportunity to consider our superior all-cash offer for their shares in the entire company. Our public offer, which is on the same terms we provided to the Warner Bros. Discovery Board of Directors in private, provides superior value, and a more certain and quicker path to completion. We believe the WBD Board of Directors is pursuing an inferior proposal which exposes shareholders to a mix of cash and stock, an uncertain future trading value of the Global Networks linear cable business and a challenging regulatory approval process.”
He adds, “We are taking our offer directly to shareholders to give them the opportunity to act in their own best interests and maximize the value of their shares.”
Paramount said their “superior” offer would be backed by the Ellison family and RedBird Capital, in addition to debt that is fully committed by Bank of America, Citi and Apollo.
Paramount claims, “The Netflix transaction creates a clear risk of higher prices for consumers, lower pay for content creators and talent and the destruction of American and international theatrical exhibitors. Netflix has never undertaken large-scale acquisitions, resulting in increased execution risk which WBD shareholders would have to endure.”
The company concluded, “We believe our offer will create a stronger Hollywood. It is in the best interests of the creative community, consumers and the movie theater industry. We believe they will benefit from the enhanced competition, higher content spend and theatrical release output, and a greater number of movies in theaters as a result of our proposed transaction. We look forward to working to expeditiously deliver this opportunity so that all stakeholders can begin to capitalize on the benefits of the combined company.”
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