Warner Bros Tells Shareholders to Reject Paramount Skydance Takeover Bid
Warner Bros Discovery has urged its shareholders to reject a revised takeover proposal from Paramount Skydance, describing the offer as “inferior” and not in their best interests.
This marks the second time in less than a month that the company’s board has advised investors to turn down Paramount’s bid. The warning follows Warner Bros’ earlier announcement that it had agreed to sell its film and streaming businesses to Netflix in a deal valued at $72bn.
In a statement, the board said Paramount’s latest proposal failed to qualify as a “superior offer” and carried significant financial risks. Board chairman Samuel Di Piazza Jr said directors remained united in their support for the Netflix agreement.
“Paramount’s offer continues to provide insufficient value and relies on an extraordinary level of debt financing,” he said. “These terms create serious risks to completing the transaction and do not adequately protect our shareholders if the deal fails.”
He added that the Netflix agreement offers stronger value and greater certainty, without exposing investors to the risks and costs associated with Paramount’s proposal.
A major difference between the two bids lies in what each company wants to acquire. Netflix plans to purchase Warner Bros’ film and streaming operations, following a planned split of the company into two divisions later this year. Paramount, however, is seeking to buy the entire business, including cable networks such as CNN and TNT, as well as Discovery and free-to-air channels in Europe.
Paramount initially offered more than $108bn for Warner Bros in December, but the board unanimously recommended that shareholders reject the bid. Although Paramount later amended its proposal, Warner Bros said in a letter to investors that the changes still did not make the offer competitive with the Netflix deal.
The board also highlighted additional concerns, including a $2.8bn penalty Warner Bros would have to pay Netflix if it walked away from their existing agreement. It further questioned Paramount’s financial capacity, noting the company’s market value stands at about $14bn, while its bid would require more than $94bn in combined debt and equity financing.
According to the board, the scale of borrowing needed significantly increases the risk that the deal could collapse.
Paramount has been contacted for comment.
Netflix co-chief executive Ted Sarandos previously said the agreement with Warner Bros was “in the best interest of stockholders,” reinforcing the board’s stance on the transaction.
