Warner Bros. Discovery (WBD) has rejected Paramount Skydance's US$108.4 billion hostile takeover bid, labeling it "illusory" and accusing the company of misleading shareholders about its financing. Amid a competition for control over Warner Bros., which includes its film and TV assets and HBO Max, Paramount launched its bid after Warner Bros. accepted an offer from Netflix.
In a letter to shareholders, Warner Bros. claimed that Paramount's US$30-per-share cash offer was not fully guaranteed as stated, highlighting the "numerous risks" associated with it. The board considers Paramount's offer inferior to Netflix's binding cash-and-stock deal, which requires no equity financing.
Paramount countered, asserting that its all-cash bid provides more certainty and value than Netflix's offer, which has been affected by its declining stock price. Paramount's CEO, David Ellison, stated that their proposal is a superior option for shareholders.
Meanwhile, Netflix is discussing regulatory frameworks with the U.S. Department of Justice and the European Commission, expressing confidence in achieving a favorable outcome. As Warner Bros. shares dropped by 1.2%, Netflix saw a 2.5% gain, while Paramount's shares fell by 4.8%.
Amid the bidding war, Warner Bros. raised concerns about Paramount's creditworthiness and the structure of its financing, while Paramount claimed to have arranged $41 billion in equity from the Ellison family and US$54 billion in debt commitments. Warner Bros. contended that Paramount's offer posed significant risks and questioned the sustainability of its financial claims. Ultimately, Warner Bros. emphasized that no proposals from Paramount have matched the merits of the agreement with Netflix.
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