Warner Bros. Discovery’s board says it will “carefully review and consider” Paramount’s latest amended, $30 per share tender offer for the entire company.
On Tuesday, Paramount CEO David Ellison offered a 25 cent per share ticking fee, which is the equivalent of approximately $650 million cash value each quarter, that would be paid to shareholders for every quarter the transaction is not closed beyond Dec. 31, 2026.
The company has also committed to funding a $2.8 billion termination fee payable to Netflix and reimbursing WBD shareholders for a $1.5 billion financing cost associated with a debt exchange without reducing its $5.8 billion breakup fee.
Paramount also said it would either extend the company’s existing $15 billion bridge loan and cover any incremental costs to do so or permit WBD
to “structure permanent financing in any way it chooses so long as the debt is redeemable at a commercially reasonable cost.”
Additionally, Paramount said it would provide flexibility between signing and closing of a deal, including by matching any comparable Netflix interim operating covenants, and said it is open to discussing “contractual solutions to account for the possibility of continuing deteriorating financial performance beyond what WBD is currently projecting for its linear network business.”
The amender offer includes $43.6 billion of equity commitments from the Ellison family and RedBird Capital Partners and $54 billion of debt commitments from Bank of America, Citigroup and Apollo. Oracle co-founder Larry Ellison has also made an irrevocable personal guarantee towards $43.3 billion of the equity financing as well as any damage claims against Paramount.
WBD’s board said it is not modifying its recommendation with respect to its pending $83 billion deal with Netflix.
It will advise shareholders of its recommendation on Paramount’s offer following a review and consultation with its financial advisors Allen & Company, J.P. Morgan and Evercore and legal counsel Wachtell Lipton, Rosen & Katz and Debevoise & Plimpton LLP.
“WBD stockholders are advised not to take any action at this time with respect to the amended Paramount Skydance tender offer,” the board added.
The sweetened offer, which marks Paramount’s ninth proposal to date, comes as the media giant says it has complied with the Department of Justice’s second request for information related to the regulator’s review of its tender offer as of Monday.
The waiting period will expire 10 calendar days after Paramount certified “substantial compliance with such request” at 11:59 p.m. ET. Additionally, Paramount said it received clearance from foreign investment authorities in Germany on Jan. 27.
Even if Paramount’s bid clears the Hart-Scott-Rodino (HSR) review period, the DOJ can still investigate or challenge a potential deal with Warner Bros. It also hinges on shareholder approval of its tender offer. Paramount had 168.5 million shares, or around 7% of WBD’s total 2.48 billion outstanding shares, validly tendered and not withdrawn as of Jan 21, though shareholders can withdraw at any time before Feb. 20.
In addition to the latest bid, Paramount has launched a proxy battle and is urging shareholders to vote against the Netflix deal as well as the pending spinoff of Warner’s cable networks into Discovery Global.
“We note that, to engage with Paramount under the terms of the Netflix agreement, you must simply conclude that this Revised Proposal could reasonably lead to a superior outcome for your shareholders. We are highly confident our Revised Proposal surpasses this standard as a superior package to the Netflix agreement,” Ellison’s wrote in a letter to WBD’s board. “We appreciate this has been a long and involved process for all parties. We believe we have a path to bring this to a rapid conclusion that would be in the best interests of WBD and its shareholders. We hope you will decide to engage with us to enable that value-maximizing outcome.”
