The Paramount-Warner Bros. merger has cleared a major hurdle, with the latter’s shareholders voting “overwhelmingly” to approve the $110 billion deal during a special meeting on Thursday, according to a preliminary tally.
“We appreciate the support and confidence our stockholders have placed in us to unlock the full value of our world-class entertainment portfolio,” WBD board chairman Samuel A. Di Piazza, Jr. said in a statement. “With Paramount, we look forward to creating an exceptional combined company that will expand consumer choice and benefit the global creative talent community.”
“Over the past four years, our teams have transformed Warner Bros. Discovery and returned the company to industry leadership,” CEO David Zaslav added. “Today’s stockholder approval is another key milestone toward completing this historic transaction that will deliver exceptional value to our stockholders. We will continue to work with Paramount to complete the remaining steps in this process that will create a leading, next-generation media and entertainment company.”
Despite the approval of the deal, shareholders voted to reject Zaslav’s $887 million golden parachute tied to the merger, though that vote is non-binding.
Shareholders of record as of March 20 were entitled to vote at the meeting. As of the record date, Warner Bros. had 2.51 billion outstanding shares. The full results of the vote will be released in an 8-K filing at a later date.
Under the terms of the deal, WBD shareholders will receive $31 per share in cash for each share of WBD common stock they own, which represents a 147% premium to the company’s unaffected stock price of $12.54 per share.
The transaction is funded by $47 billion in equity, which includes contributions from three Middle Eastern sovereign wealth funds and LionTree Investment Fund, who will have no board seats or governance rights. The equity financing is backstopped by the Ellison family and RedBird Capital Partners. It also includes $54 billion of debt commitments from Bank of America, Citigroup and Apollo.
“Shareholder approval marks another important milestone towards completing our acquisition of Warner Bros. Discovery, building on our successful equity and debt syndications and progress across regulatory approvals,” Paramount said in a statement. “We look forward to closing the transaction in the coming months and realizing the creation of a next-generation media and entertainment company that better serves both the creative community and consumers.”
The merger is expected to close by the third quarter, pending regulatory approval, though executives have said the closing could come as soon as July. The deal is currently being reviewed by the U.S. Department of Justice as well as antitrust authorities in Europe and the U.K. Critics of the deal have also called on state attorneys general to step in with a lawsuit to block the merger from closing.
In the event the transaction does not close by Sept. 30, WBD shareholders will receive a 25 cent per share “ticking fee” for each quarter until closing. In the event that the deal does not close at all due to regulatory matters, Paramount will pay WBD a $7 billion termination fee.
