Warner Bros. Rejects Revised Paramount Bid, Tells Shareholders to Stay with Netflix

• Warner Bros. Discovery's board again rejected a takeover bid from Paramount and told shareholders to stick with a rival offer from Netflix. In a letter to shareholders, Warner Bros' board noted that Paramount's revised $108.4Bn US hostile bid amounted to a risky leveraged buyout that investors should reject.
• The company's board noted Paramount's offer hinges on "an extraordinary amount of debt financing" that heightens the risk of closing. It reaffirmed its commitment to streaming giant Netflix's $82.7Bn deal for the film and television studio and other assets. "Our binding agreement with Netflix will offer superior value at greater levels of certainty, without the significant risks and costs that Paramount's offer would impose on our shareholders," Warner Bros. Discovery chair Samuel Di Piazza Jr. highlighted in a statement.
• Paramount and Netflix have been vying to win control of Warner Bros., and with it, its prized film and television studios and extensive content library. Its lucrative entertainment franchises include Harry Potter, Game of Thrones, Friends and the DC Comics universe, as well as coveted classic films such as Casablanca and Citizen Kane.
• Warner's leadership has repeatedly rebuffed Paramount's bids and urged shareholders to instead back its sale of the streaming and studio business to Netflix. Late last month, Paramount announced an "irrevocable personal guarantee" from Oracle founder Larry Ellison, the father of Paramount CEO David Ellison, to back $40.4Bn in equity financing for the company's offer. Paramount also increased its promised payout to shareholders to $5.8Bn if the deal is blocked by regulators, matching what Netflix already put on the table.
• Paramount's financing plan would saddle the smaller Hollywood studio with $87 billion in debt once the acquisition closed, making it the largest leveraged buyout in history, the Warner Bros board told shareholders after voting against the $30-per-share cash offer.
• The letter accompanied a 67-page amended merger filing, where it laid out its case for rejecting Paramount's offer. In it, the Warner Bros. board said it met on Dec. 23 to review Paramount's amended offer and noted some improvements, including Ellison's personal guarantee and a higher reverse termination fee of $5.8 billion US, but it found "significant costs" associated with Paramount's bid compared with a Netflix deal.
• Netflix co-CEOs Ted Sarandos and Greg Peters welcomed Warner Bros.' decision on Wednesday, saying it recognises the streaming giant's deal "as the superior proposal that will deliver the greatest value to its stockholders, as well as consumers, creators and the broader entertainment industry."

(Source: Reuters)