Warner Bros. Discovery says that it is officially reviewing a sweetened bid for the company from David Ellison’s Paramount.
The details of Paramount’s revised bid were not immediately known. The company had offered $30 per share, with a “ticker” that would raise the price for every quarter the deal had not closed past the end of this year. The company is still recommending that shareholders vote for the Netflix deal next month, as of now.
“Following engagement with PSKY during the seven-day limited waiver period, we received a revised PSKY proposal to acquire WBD, which we are reviewing in consultation with our financial and legal advisors,” WBD’s board said in a statement Tuesday morning. “We will update our shareholders following the Board’s review. The Netflix merger agreement remains in effect, and the Board continues to recommend in favor of the Netflix transaction. WBD shareholders are advised not to take any action at this time with respect to the amended PSKY tender offer.”
While previous bids from Paramount have been made public, this was the first “authorized” bid for the company since WBD inked its deal with Netflix, with the company opening a seven day negotiating window last week. It is not clear if Paramount will choose to disclose its latest bid before WBD makes its next move.
The new bid from Paramount is likely to see WBD go back to Netflix to see if they will respond by “matching” Paramount’s bid, as they are permitted to do under the signed deal agreement. Of course, Netflix is only buying the Warner Bros. studio and HBO business, so a match wouldn’t necessarily be exactly the same deal.
Streaming giant Netflix has sweetened its takeover bid for the studio and streaming operations of Warner Bros. Discovery (WBD) in a move to fend off an increased offer from David Ellison’s Paramount, which had put pressure on WBD to consider reopening sales talks.
Members of the board of WBD had given Paramount a deadline of early this week for a revised best and final bid, while Paramount has also been pushing its hostile takeover bid directly with shareholders in its effort to derail the previously agreed $82.7 billion Netflix deal. That deal was first unveiled in December and amended into an all-cash bid in late January.
On Feb. 10, Paramount had added sweeteners to its own bid for all of WBD, including with a promise to cover the $2.8 billion fee owed to Netflix if WBD pulled out of its deal with the streamer and to backstop a refinancing that would cut costs by $1.5 billion. Paramount also added a so-called “ticking fee” of $650 million in cash per quarter if the deal is not completed by the end of 2026. Said Ellison: “We are making meaningful enhancements – backing this offer with billions of dollars, providing shareholders with certainty in value, a clear regulatory path, and protection against market volatility.”
Warner Bros. said in response that it would review the amended offer, but didn’t immediately modify its recommendation for shareholders to approve the Netflix deal. Some smaller shareholders have pressured WBD to engage with Paramount.
The big transaction has been a drag on Netflix’s stock, with Guggenheim Securities analyst Michael Morris recently noting: “We expect the path to conclusion on the WBD bid will remain a primary sentiment driver and likely share appreciation limiter over the next three months.”
And Robert Fishman, analyst at MoffettNathanson, recently wrote: “Netflix’s stock price should have a harder time rebounding as long as the ongoing WBD potential bidding war continues.”
With a vote on the Netflix deal set for March 20, the battle for WBD appears to be nearing its end for now … unless and until regulators get in the game themselves.
