With the acquisition deal still unresolved, Paramount Skydance, another media producer managed by the Ellison family, has renewed its bid to buy Warner Bros Discovery (WBD), aiming to persuade Warner Bros shareholders that its offer is more valuable than Netflix's.
Paramount has proposed buying WBD shares at $30 per share in an all-cash offer, seeking to acquire the entire Warner Bros Discovery business. In contrast, Netflix intends to purchase only the studio, films, series, and HBO and HBO Max streaming services. According to CNBC, Paramount's bid is considered a “hostile takeover” and could lead to a more complex bidding war.
However, the $30 per share offer from Paramount matches its initial proposal, which was rejected last week. This time, Paramount is approaching WBD shareholders directly, with a total enterprise value estimated at approximately $108.4 billion.
Paramount has officially launched a Tender Offer to purchase all WBD shares at $30 per share in cash. The funding includes $41 billion from its shareholders, with the remainder coming from RedBird Capital and Affinity Partners. Additionally, Paramount plans to borrow $54 billion from Bank of America, Citi, and Apollo Global Management.
The tender offer will be open for 20 business days, with Warner Bros Discovery having 10 days to respond. If after 20 days no agreement is reached, Paramount may extend the period to continue soliciting shares from WBD shareholders.
During this time, any WBD shareholder can immediately sell shares to Paramount at $30 per share. If Paramount acquires more than 51% of the shares, it will gain control of the company.
If WBD shareholders find Paramount's offer more attractive, WBD's management may need to reopen negotiations with Paramount to secure the best possible deal.
David Ellison, CEO of Paramount, told CNBC that the $30 per share offer is not the “best and final” deal, indicating that Paramount is willing to raise the price if negotiations restart.
The all-cash $30 per share offer exceeds Netflix’s $27.75 per share proposal, which included cash and stock and covered only the streaming and studio business.
Ric Prentiss, a stock analyst from Raymond James, stated in an analysis that Paramount’s offer has a reasonable chance of acceptance but believes Netflix remains committed to the deal and may counter if Paramount gains an advantage.
Such a counter might include Netflix increasing its offer. However, Netflix has not yet responded publicly following Paramount’s renewed bid for WBD shares.
Meanwhile, Warner Bros Discovery’s board issued a statement saying it “has not changed its recommendation regarding the Netflix agreement” and urged shareholders not to take action on Paramount’s offer at this time. The board emphasized it would “carefully consider and evaluate Paramount’s proposal under the terms of WBD’s agreement with Netflix.”
If WBD decides to proceed with Paramount, it must pay Netflix a $2.8 billion termination fee. This means Paramount might need to raise its offer price or accept the penalty cost to offset the increased expense of switching partners.
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