Paramount Skydance is celebrating the fact that its takeover bid for Warner Brothers Discovery has survived its first regulatory hurdle and is now past the waiting period restriction imposed by the Department of Justice.
The studio says that on February 19 its bid cleared the Department of Justice’s Hart-Scott-Rodino (HSR) waiting period and is now ready for serious consideration, according to The Wrap.
The February date represents the extension date requested by the government. After Paramount made its first offer, the DOJ’s antitrust division set the date of December 23 as the first hurdle. However, just before that date, the department asked for more information, which reset the waiting period date to February 19. But now the date has passed, meaning the offer has survived its first major legal hurdle.
On Friday, Paramount said in a statement that there is “no statutory impediment in the U.S. to closing Paramount’s proposed acquisition of WBD.”
While the claim is technically true, there are still other hurdles to come and the successful arrival of the waiting period date does not prevent the DOJ from further investigations and actions to stop the process.
Netflix has called Paramount’s announcement an effort to “mislead stockholders.”
“Paramount Skydance continues to mislead stockholders and distract from the facts. The facts are that routine HSR milestones do not signal DOJ approval nor that any decision has been made,” Netflix chief legal officer David Hyman said on Friday. “They have not secured approvals needed to close and they are a long way from doing so.”
Officially, the Warners board is still backing the deal with Netflix, but the board has also said it remains open to further offers by Paramount. Netflix even conceded that Warners could continue mulling the Paramount offers.
Early in February, Paramount had sweetened its former bid by offering to pay Warner shareholders a “ticking fee” of 25 cents per share — a total of $650 million. And the studio also pledged to pay the proposed $2.8 billion breakup payout to Netflix under its initial studio and streaming merger agreement.
Still, Warners again rejected Paramount’s offer of $30 per share, prompting Paramount of say it might up the bid to $31 per share. This compared to the $27.50 per share Netflix has offered and Warners has tentatively accepted.
Netflix continues to claim that Paramount has misrepresented its offer to Warners and also warned that Paramount is still under a microscope over its recent merger with Skydance.
On top of that, many film industry insiders are warning that allowing Warners to be bought by streaming giant Netflix is a direct threat to the film industry.
Famed director James Cameron, for instance, recently warned that the Netflix deal is a “disaster” for Hollywood.
“I believe strongly that the proposed sale of Warner Brothers Discovery to Netflix will be disastrous for the theatrical motion picture business that I have dedicated my life’s work to,” Cameron wrote this week. “Of course, my films all play in the downstream video markets as well, but my first love is the cinema.”
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