Warner Bros board urges investors to reject Paramount’s hostile takeover bid
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The news: Warner Bros Discovery’s board recommended that shareholders reject a hostile takeover bid from Paramount Skydance on Wednesday, arguing that it failed to provide adequate assurances around financing.
The numbers: Warner Bros said that Paramount’s USD108.4 billion ($163.69 billion) hostile bid launched on 9 December presented an “illusory” offer and that the Ellison family has failed to adequately backstop their USD40.7 billion equity commitment. The equity is supported by “an unknown and opaque revocable trust,” the board said in a to shareholders.
Paramount Skydance’s offer came just days after Warner Bros reached a USD72 billion cash-and-stock deal with Netflix.
The context: The board wrote that Paramount Skydance, controlled by Oracle founder Larry Ellison and his son David, had “consistently misled” Warner Bros shareholders that its USD30-per-share cash offer was fully guaranteed by the Ellison family, adding that Paramount proposes “that you rely on an unknown and opaque revocable trust for the certainty of this crucial deal funding.”
It said that the documents Paramount provided “contain gaps, loopholes and limitations that put you, our shareholders, and our company at risk.”
Paramount’s bid initially included capital from the sovereign-wealth funds of three Gulf states, as well as Jared Kushner’s Affinity Partners, however Affinity pulled out of the bid on Tuesday. It had joined the process in October and was contributing around USD200 million in equity.
The letter urges shareholders to instead back the original merger agreement with Netflix, which also agreed to a regulatory termination cash fee of USD5.8 billion.
“The Warner Bros Discovery Board unanimously reiterates its recommendation in support of the Netflix combination and recommends that WBD shareholders reject [Paramount Skydance’s] offer.”
What they said: "Following a careful evaluation of Paramount's recently launched tender offer, the Board concluded that the offer's value is inadequate, with significant risks and costs imposed on our shareholders," said Samuel A. Di Piazza, Jr., chair of the Warner Bros. Discovery Board of Directors. "This offer once again fails to address key concerns that we have consistently communicated to Paramount throughout our extensive engagement and review of their six previous proposals. We are confident that our merger with Netflix represents superior, more certain value for our shareholders and we look forward to delivering on the compelling benefits of our combination."
The source: Warner Bros Discovery
