Paramount Targets Warner Bros. in Hostile Takeover After Netflix Deal
David Ellison is stepping up his bid to take over Warner Bros. Discovery. On Monday, his company, Paramount Skydance, announced a new all-cash offer to buy every outstanding share of WBD at $30 per share.
This is the same offer Ellison made privately to WBD’s board earlier this month. Paramount wants to acquire the entire company, including TV networks like CNN, TBS, and TNT.
The announcement comes after Netflix and WBD revealed a deal on Friday in which Netflix will buy Warner Bros.’ studio operations, HBO, and HBO Max for $72 billion. Paramount says its all-cash offer is worth $108.4 billion when factoring in debt. They criticized Netflix’s offer as “a volatile and complex structure” because it includes a mix of cash and stock and depends on the future performance of Netflix.
Paramount said in a statement, “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.”
The $30 per share offer is supported by Ellison’s father, Oracle co-founder Larry Ellison, and RedBird Capital Partners. Additional backing comes from the sovereign wealth funds of Saudi Arabia, Qatar, and Abu Dhabi.
Jared Kushner’s Affinity Partners and Tencent are also contributing, and the deal will be financed in part by debt commitments from Bank of America, Citi, and Apollo Global Management. Paramount noted that the investors will not have any governance rights, meaning the deal does not fall under U.S. government review for foreign investment.
This is not Ellison’s first attempt. He made offers of $19, $22, and $23.50 per share earlier this year, all of which were rejected by WBD’s board. He then made a $26.50 all-cash bid before the current $30 per share offer.
Despite these moves, the board has chosen Netflix as the buyer for Warner Bros. and HBO Max. Paramount claims their offer is $18 billion higher than Netflix’s and argued that the board’s decision was based on an unrealistic valuation of the planned TV networks spin-off, Discovery Global.
It is unclear whether WBD chief David Zaslav would still be offered a co-chairman or co-CEO position under a merged Paramount-WBD company, as he had been in previous proposals.
Ellison said in a statement, “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. 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 shareholders can learn more about the offer at strongerhollywood.com.
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