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WBD Board Rejects Paramount's Revised Takeover Bid
Warner Bros. Discovery's board has unequivocally rejected Paramount Skydance's revised hostile takeover bid, reaffirming its commitment to a previously agreed merger with Netflix. The board declared the Paramount offer did not meet the criteria for a "Superior Proposal" under its existing Netflix agreement. This decision marks a significant turn in the ongoing media M&A drama.
Superior Value Cited
The WBD board asserted that the merger with Netflix offers superior value and greater certainty for shareholders compared to Paramount's proposal. Shareholders are being urged to reject Paramount's offer and continue to support the Netflix transaction, announced earlier in December. This stance highlights the board's confidence in the Netflix deal's strategic and financial merits.
Paramount's Bid Concerns
Paramount's initial hostile bid, valued at $108.4 billion, aimed to forge a media giant but was later revised. The latest offer, structured as an all-cash deal worth $82.7 billion including debt, also included a substantial $5.8 billion break-up fee payable to Netflix. However, WBD's board previously labeled Paramount's bid as financially inadequate and carrying excessive risk, particularly due to its reliance on significant debt financing.
Debt Load Scrutiny
Warner Bros. Discovery expressed serious concerns about Paramount's plan to finance the acquisition primarily through debt, estimating a need to borrow over $50 billion. The board warned that such a heavy debt load could jeopardize the transaction, akin to a leveraged buyout, and expose shareholders to substantial downside risk. This financial structure stands in stark contrast to the perceived stability of the Netflix deal.
Certainty and Safeguards
The WBD board emphasized the heightened risk of Paramount's offer failing to close, citing insufficient shareholder protections. This uncertainty contrasts sharply with the Netflix deal, described as a binding agreement promising clearer value, financial stability, and a higher likelihood of completion. Samuel A. Di Piazza Jr., chair of the WBD board, stated the Netflix merger provides stronger safeguards and avoids Paramount's uncertainties. The board maintains that accepting Paramount's proposal could result in serious financial consequences if the deal collapses due to the complex financing and debt involved.