Paramount given seven-day window to beat Netflix’s WBD offer
Paramount boss David Ellison has seven days to wrestle WBD from Netflix
On Tuesday, Warner Bros Discovery offered Paramount Skydance a seven-day window in which to deliver a superior offer to Netflix for the company.
After the WBD board rejected several hostile takeover offers from Paramount — including a recent bid that offered to cover the US$2.8 billion reverse break-up fee payable to Netflix if they renege on the deal — WBD has now offered Paramount seven days “to clarify your proposal, which we understand will include a WBD per share price higher than US$31.”
A letter sent to the Paramount board on Tuesday, co-authored by CEO David Zaslav and chair Samuel DiPiazza Jr, stressed that the WBD board “has not determined that your proposal is reasonably likely to result in a transaction that is superior to the Netflix merger” and that it continued to recommend the Netflix deal to shareholders.
Nevertheless, WBD is seeking Paramount’s “best and final proposal” by February 23, with shareholders set to meet on March 20 to vote on the Netflix merger agreement.
WBD said that Paramount’s amended offer, made on February 10, “addresses some of the concerns [it] had identified several months ago [but] it still contains many of the unfavourable terms and conditions that were in the draft agreements … twice unanimously rejected by our Board.”
The letter said Paramount’s failure to address these concerns in its latest bid, despite expressing “a willingness” to do so, leaves the board with “vague assurances of intention”.
“During this seven-day period – as we consistently did during the strategic review process last year – we welcome the opportunity to engage with you and expeditiously determine whether PSKY can deliver an actionable, binding proposal that provides superior value, transaction certainty and interim protection for WBD’s businesses to Warner Bros. Discovery shareholders.”
Netflix co-CEO Ted Sarandos
Paramount Skydance issued a statement that said it was willing to continue negotiations.
“Although the Board’s actions are unusual, Paramount is nonetheless prepared to engage in good faith and constructive discussions,” Paramount said.
“At the same time, we will continue to advance our tender offer, maintain our solicitation in opposition to the inferior Netflix merger, and proceed with our intention to nominate a slate of directors at the upcoming WBD annual meeting.”
Paramount’s statement reaffirmed its current offer of US$108.4b (A$153b) for the entire business is superior to Netflix’s US$72b (A$101.5b) deal to acquire just Warner Bros’ studios and HBO Max.
The WBD board “elected to proceed with convening its special shareholder meeting on March 20 to seek approval of the Netflix merger and has commenced mailing its proxy materials, which state that the range of merger consideration offered to WBD shareholders will be a minimum of US$21.23 to a maximum of US$27.75,” Paramount said in its statement.
“By contrast, Paramount already offers a higher value of US$30 per share, all-cash and a more expeditious and certain path to closing a transaction.”
WBD also criticised the seven-day window for submitting a best and final offer, noting that its board “has chosen to avoid making the customary determination under the Netflix merger agreement that Paramount’s superior US$30-per-share all-cash offer ‘could reasonably be expected to result in’ a superior proposal, which would have granted it an unfettered right to negotiate without a deadline.”
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