Warner Bros. says: Discovery is officially reviewing an improved bid for the company from David Ellison’s Paramount.
Details of Paramount’s revised offer were not immediately known. The company had offered $30 per share, with a “tape” that would raise the price for each quarter the deal was not closed after the end of this year. The company is still recommending shareholders vote on the Netflix deal next month, as of now.
“After engaging with PSKY during the limited seven-day waiver period, we received a revised proposal from PSKY to acquire WBD, which we are reviewing in consultation with our financial and legal advisors,” WBD’s board of directors said in a statement Tuesday morning. “We will update our shareholders following Board review. The Netflix Merger Agreement remains in effect, and the Board of Directors continues to recommend in favor of the Netflix transaction. WBD shareholders are advised not to take any action at this time with respect to PSKY’s amended tender offer.”
Paramount also issued a statement confirming the offer, but also did not reveal any other details.
Although previous offers from Paramount had been announced, this was the company’s first “authorized” offer since WBD signed its deal with Netflix, with the company opening a seven-day negotiating window last week.
The new offer from Paramount will likely result in WBD coming back to Netflix to see if they will respond by “matching” Paramount’s offer, as they are allowed to do under the signed deal agreement. Of course, Netflix is buying studio Warner Bros. And HBO only works, so the match won’t necessarily be exactly the same deal.
Streaming company Netflix has refined its bid to acquire Warner Bros.’ studio and streaming operations. Discovery (WBD) in a move to fend off an increased bid from David Ellison’s Paramount, which has put pressure on WBD to consider reopening sales talks.
WBD board members gave Paramount a deadline of early this week to submit a revised best and final offer, while Paramount has also been pushing its hostile takeover bid directly with shareholders in its efforts to block the previously agreed-upon $82.7 billion Netflix deal. This deal was first revealed in December and was amended to an all-cash offer in late January.
On February 10, Paramount added sweeteners to its special offer for all of WBD, including a promise to cover the $2.8 billion in fees owed to Netflix if WBD backs out of its deal with the carrier and to support a refinancing that would cut costs by $1.5 billion. Paramount also added a so-called “signing fee” of $650 million in cash per quarter if the deal is not completed by the end of 2026. “We are making meaningful improvements — backing this offering with billions of dollars, providing shareholders certainty of value, a clear regulatory path, and protection from market volatility,” Ellison said.
In response, Warner Bros. said: It will review the revised offer, but did not immediately revise its recommendation to shareholders to approve the Netflix deal. Some small shareholders pressured WBD to deal with Paramount.
This blockbuster deal has been a drag for Netflix shares, with Guggenheim Securities analyst Michael Morris recently noting: “We expect the path to finality on the WBD offering to remain a key driver of sentiment and likely a determinant of the stock’s appreciation over the next three months.”
“Netflix’s stock price should have difficulty rebounding as long as a potential bidding war for WBD continues,” Robert Fishman, an analyst at MoffittNathanson, recently wrote.
With a vote on the Netflix deal scheduled for March 20, the battle for WBD appears to be coming to an end for now… unless regulators get into the game themselves.
