Warner Bros. Discovery suggested on Wednesday that investors reject Paramount’s unsolicited all-cash offer, claiming that Netflix’s offer for its studios and HBO Max streaming service is still the best choice.
Warner expressed doubts about the legitimacy of the equity supporting the bid and called the Paramount offer “illusory” in a letter to shareholders. The company claimed that Paramount has “consistently misled” Warner shareholders and questioned the Ellison family’s commitment to financing the deal. Along with RedBird Capital, David Ellison, the CEO of Paramount, and his father, Larry Ellison, a billionaire co-founder of Oracle, hold the majority of the company’s shares.
Warner Bros rejects Paramounts offer as Netflix’s offer is better
Warner split into two companies earlier this month, and Netflix agreed to pay $72 billion, or $27.75 per share in cash and stock, for Warner’s studio and HBO Max streaming business. After that deal, Paramount made a hostile $77.9 billion bid to buy Warner in its entirety, arguing that its plan would benefit shareholders more and have a higher chance of passing regulators. Warner was about to turn down the offer, according to a Wall Street Journal article published on Tuesday.
In its letter, Warner’s board firmly objected, stating that the Ellison family intends to finance the purchase through a revocable trust and that the documents Paramount supplied “contain gaps, loopholes and limitations that put you, our shareholders, and our company at risk.” Warner, on the other hand, claimed that Netflix, a publicly traded company with a market capitalization of more than $400 billion and an investment-grade balance sheet, fully supports the deal. “The terms of the Netflix merger are superior,” Warner said. “The [Paramount] offer provides inadequate value and imposes numerous, significant risks and costs on [Warner].”
After Warner’s decision, Netflix co-CEO Ted Sarandos said Netflix and Warner “complement each other, and we’re excited to combine our strengths with their theatrical film division, world-class television studio, and the iconic HBO brand, which will continue to focus on prestige television.”
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