Paramount Skydance is undeterred by the Warner Bros. Discovery board’s latest rejection of its offer to acquire the company, but is not raising its bid above its stated $30-per-share all-cash offer. At least not yet.
In a statement released Thursday morning, Paramount said it “notes” WBD’s latest rejection (its eighth, if you’re counting) and reaffirmed why the company believes its offer is superior to Netflix’s.
The company said it “cured every issue” Warner Bros. raised in December about its offer, “most notably by providing an irrevocable personal guarantee by Larry Ellison for the equity portion of the financing.” But the company said WBD “continues to raise issues in Paramount’s offer that we have already addressed” and pointed the finger at Netflix’s offer, which it said “contains multiple uncertain components and has already decreased in total value.”
“Our offer clearly provides WBD investors greater value and a more certain, expedited path to completion,” Paramount chairman and CEO David Ellison said. “Throughout this process, we have worked hard for WBD shareholders and remain committed to engaging with them on the merits of our superior bid and advancing our ongoing regulatory review process.”
While acknowledging that Larry Ellison “stepped up to the table” with a personal guarantee, WBD’s latest concerns include fears that the revised offer’s $55 billion in debt financing would heighten the risk of its failure to close. The company’s board also said that accepting Paramount’s offer could result in $4.7 billion, or $1.79 per share, in total costs and other operating and debt refinancing restrictions that could damage WBD’s business.
In its response, Paramount said that Bank of America, Citibank and Apollo Global Management’s commitment to the providing the debt financing and to finance its offer to purchase shares remains “in full force and effect.”
“Paramount has retained the world’s premier financial partners and would welcome the opportunity to engage directly with the WBD Board to discuss the offer and address the Board’s latest claims,” the letter states.
Paramount also pointed to the stock market performance of Comcast spinoff Versant, which it says “illustrates the challenged path ahead for Discovery Global.”
Versant’s stock price plunged in its Nasdaq debut on Monday, and fell further to $33.27 as of Wednesday’s close. Many have pointed to Versant as a proxy of the value of Discovery Global, which will contain all the cable assets from WBD and be spun off in the third quarter of 2026.
Based on Versant’s trading, Paramount values Discovery Global between $0 and $0.50 per share.
“While Discovery Global equity would have no equity value if the company trades in-line with Versant, there are in fact several compelling reasons why it should trade at a discount to Versant,” the letter states. “First and foremost, Discovery Global will likely be significantly more leveraged. In addition, Discovery Global’s financial performance lags Versant on both a historical and projected basis, likely as a result of its less attractive portfolio.”
Lastly, Paramount claimed that the Netflix deal includes a “purchase price reduction” if WBD decides to add less debt to Discovery Global.
“This mechanism reduces proceeds to WBD shareholders from Netflix’s purchase of [streaming and studios] on a dollar-for-dollar basis, reducing cash and Netflix stock consideration and increasing the proportion of consideration coming from equity in the Discovery Global stub,” the company said. “This means that the Netflix transaction – which is already headlined as a cash-and-stock mix – is likely to deliver even less cash than its stated headline value. By contrast, Paramount’s proposal is 100% cash and definitionally completely certain.”
Based on Versant’s trading and leverage of 1.25 times on Discovery Global, Paramount said that shareholders would receive roughly $10 billion, or $3.90 per share, less of cash and Netflix stock, reducing the cash component to below $20 per share.
“Instead, shareholders would receive that $10 billion in the form of additional, uncertain equity in declining Discovery Global,” the company said. “We encourage WBD shareholders to ask the Board of WBD for transparency on this aspect of the deal with Netflix.”
Paramount concluded the letter by telling shareholders to “register their preference” for the company’s offer by tendering their shares. WBD shareholders have until Jan. 21 at 5 p.m. ET to tender their shares, though that deadline can be extended.
As of Dec. 19, less than 400,000 shares had been validly tendered and not withdrawn, though shareholders can do so at anytime before the deadline. WBD has approximately 2.48 billion outstanding shares.
