The boardroom battle for Warner Bros. Discovery (WBD) escalated Wednesday as the media giant officially rejected a $30-per-share hostile takeover bid from David Ellison’s Paramount, dismissing the offer as “inferior” to its pending merger with Netflix.
In a letter to shareholders, the WBD board characterized the $108 billion Paramount proposal as fraught with uncertainty, citing concerns over foreign financing and the structure of the financial backing provided by Oracle founder Larry Ellison.
“Following a careful evaluation of Paramount’s recently launched tender offer, the Board concluded that the offer’s value is inadequate, with significant risks and costs imposed on our shareholders,” said Samuel A. Di Piazza, Jr., chair of the WBD board. “We are confident that our merger with Netflix represents superior, more certain value for our shareholders.”
READ: Streaming Wars Go Nuclear: Paramount Launches Hostile Cash Bid To Derail Netflix-Warner Deal
The rejection forces Paramount into a difficult position: persuade WBD shareholders to tender their shares despite the board’s recommendation, or return to the table with a higher offer that could reshape the financial landscape of the deal.
Concerns Over Foreign Capital and ‘Trust’ Issues
The WBD board’s refusal hinged largely on the complexity and reliability of Ellison’s financing. According to the filing, the board took issue with a backstop provided by Larry Ellison’s revocable trust, noting that the specific assets and liabilities within the trust were undisclosed and subject to change.
“He guaranteed it through an irrevocable trust at the last minute, and frankly, that wasn’t as good as an investment-grade company that purported strong value,” Di Piazza told CNBC following the announcement.
Beyond the Ellison family’s contribution, WBD flagged potential regulatory and closing risks tied to the consortium’s reliance on Middle East sovereign wealth funds. The bid includes $10 billion from Saudi Arabia’s Public Investment Fund, alongside $7 billion each from the Abu Dhabi and Qatar Investment Authorities.
READ :Netflix Seizes The Throne: Streaming Giant Buys Warner Bros. In Historic $72 Billion Deal
The board also noted that previous concerns regarding a $1 billion contribution from Chinese tech giant Tencent had forced Paramount to scrub the company from its latest proposal.
Netflix Defends the ‘Right Deal’
As the hostile bid played out, Netflix sought to reassure the market that its agreement remained the strongest path forward. In a letter to shareholders Wednesday, Netflix co-CEO Ted Sarandos argued the merger would benefit consumers and creators alike, specifically highlighting a commitment to traditional theatrical releases for Warner Bros. films.
“The Warner Bros. Discovery Board reinforced that Netflix’s merger agreement is superior and that our acquisition is in the best interest of stockholders,” Sarandos said.
However, the specter of a bidding war remains. Sources indicate Ellison and his team were waiting for WBD’s formal response before deciding on their next move. Just hours before the Netflix deal was originally sealed, Ellison had texted WBD CEO David Zaslav to clarify that his previous offer was not “best and final,” signaling a willingness to pay more.
Wall Street Watches for a Counter
The dynamic mirrors Disney’s acquisition of Fox, a protracted battle that saw Comcast repeatedly outbid before Disney ultimately prevailed. Some WBD shareholders have reportedly expressed interest in Paramount’s all-cash offer, and if Ellison raises the price, pressure could mount on the board to reconsider.
For now, Netflix leadership says they are pressing ahead with the regulatory review process. When asked about the possibility of a price war, Netflix co-CEO Greg Peters told CNBC the company would remain “dispassionate.”
“Doing a deal is great, closing a deal is better,” Di Piazza noted, summarizing the board’s preference for the certainty of the Netflix agreement over the potential volatility of the Ellison bid.
For his part, WBD CEO David Zaslav addressed staff in an email on Wednesday, confirming that the regulatory review for the Netflix merger has already begun. “Let’s see what happens,” Peters said.
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