Paramount offers to pay USD2.8b breakup fee in Warner Bros deal
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The news: Paramount Skydance submitted an enhanced offer for Warner Bros Discovery on Tuesday in efforts to gain shareholder support for its bid over that of Netflix.
The numbers: Paramount said it will pay the USD2.8 billion ($3.96 billion) termination fee that Warner Bros will have to pay to Netflix should it walk away from its agreement with the streaming service.
Paramount also said it will pay USD1.5 billion in fees linked to a Warner Bros debt refinancing. Paramount said it will fully reimburse Warner’s shareholders for the USD1.5 billion fee, without reduction to the separate USD5.8 billion reverse termination fee, in the "unlikely event that the exchange is not successful and the Paramount transaction does not close."
Paramount also offered to pay a 25 US cents per share “ticking fee” to all Warner shareholders for each quarter its transaction has not closed beyond 31 December 2026, “underscoring Paramount's confidence in the speed and certainty of regulatory approval for its transaction.”
The context: Paramount has been pursuing Warner Bros since September last year, but was caught off guard when the Warner board agreed to sell its studios and HBO Max streaming service to Netflix for USD27.75 a share, or USD82.7 billion.
Paramount responded by launching a hostile takeover for the entirety of Warner Bros at USD30 per share in December, which the Warner board has recommended that shareholders vote against.
Last month, Paramount filed a lawsuit seeking information and that it will launch a proxy fight for Warner Bros Discovery board seats as it persists with its hostile pursuit of the company.
Warner Bros has said it will ask shareholders to vote on the Netflix transaction by April.
What they said: David Ellison, chairman and CEO of Paramount, said: "The additional benefits of our superior USD30 per share, all-cash offer clearly underscore our strong and unwavering commitment to delivering the full value WBD shareholders deserve for their investment. We are making meaningful enhancements – backing this offer with billions of dollars, providing shareholders with certainty in value, a clear regulatory path, and protection against market volatility."
The source: Paramount Skydance
