Jan. 7 (UPI) — The board of directors at Warner Bros. Discovery announced Wednesday that it unanimously recommended shareholders reject the hostile bid by Paramount Skydance and stick with Netflix.
The board said the Paramount offer was “not in the best interests of WBD and its shareholders and does not meet the criteria of a ‘superior proposal’ under the terms of WBD’s merger with Netflix.”
“The board unanimously reiterates its recommendation in support of the Netflix combination and recommends that WBD shareholders reject PSKY’s offer,” a press release said.
The board sent a letter to shareholders listing reasons it doesn’t recommend choosing Paramount.
“Your board unanimously determined that the PSKY amended offer remains inadequate, particularly given the insufficient value it would provide, the lack of certainty in PSKY’s ability to complete the offer and the risks and costs borne by WBD shareholders should PSKY fail to complete the offer. Accordingly, the board unanimously recommends that shareholders not tender your shares into the PSKY offer,” the letter said.
It’s the latest in an ongoing saga of competing offers. In October, Warner Bros. announced it was open to offers after getting several unsolicited ones. On Dec. 5, after a bidding war between Netflix and Paramount, Warner Bros. said it was accepting Netflix’s offer. Then on Dec. 12, Paramount launched a hostile bid to buy WBD from under Netflix. On the 17th, the WBD board urged shareholders not to accept the Paramount bid because it didn’t have the backing of billionaire Oracle creator Larry Ellison, father of Paramount CEO David Ellison. On Dec. 22, Paramount assured WBD shareholders that it has Larry Ellison’s backing of $40 billion in equity.
Now, Paramount can come back with a higher offer or continue trying to convince shareholders to choose it over Netflix.
“We have a signed merger agreement with Netflix, it’s a compelling value, a clear path to closing and protections for our shareholders if something stops the close, whatever that might be,” WBD board Chair Samuel Di Piazza said on CNBC’s Squawk Box Wednesday morning.
If Netflix wins, it would significantly alter the company, adding HBO Max and the Warner Bros. movie and TV studio. Also, federal regulators would have to sign off on the merger, which isn’t guaranteed. President Donald Trump has said he plans to be in on the decision.
Paramount’s credit rating is at a BB+, which is at the top of the junk range, while Netflix has an A rating, which is upper medium grade.
Paramount’s bid also restricts WBD’s options in the next year. It would prevent it from spinning off its cable unit and wants to restrict how the company refinances a $15 billion bridge loan. Paramount has also not agreed to pay the $2.8 billion fee that Warner has to pay Netflix if it cancels the deal, the board said.
On Monday, Versant Media hit the Nasdaq stock market after being spun off from Comcast.
COMMENTS
Please let us know if you're having issues with commenting.