Moments after the Warner Bros. Discovery board issued a clear — and at times harsh — rejection of Paramount’s $30-per-share offer to buy the company, David Ellison said he’s undeterred and forging ahead with his company’s “superior” offer over Netflix.
“We remain committed to bringing together two iconic Hollywood studios to create a unique global entertainment leader. Our proposal clearly offers WBD shareholders superior value and certainty, a clear path to close, and does not leave them with a heavily indebted sub-scale linear business,” Ellison said in a press release on Wednesday.
“I have been encouraged by the feedback we have received from WBD shareholders who clearly understand the benefits of our offer. We will continue to move forward to deliver this transaction, which is in the best interest of WBD shareholders, consumers, and the creative industries.”
Paramount laid out the superiority of its offer as follows:
- Paramount’s offer is $30 per share in cash versus Netflix’s cash component of only $23.25 per share (an $18 billion difference in the aggregate);
- The value of Netflix’s offer has been further reduced as its share price trades below the bottom of the “collar” on its stock component;
- Netflix’s offer would leave WBD shareholders owning a highly leveraged stub in Global Networks and WBD’s Board provides no valuation of that stub; and
- Netflix’s offer has a dollar-for-dollar reduction to what WBD shareholders will receive tied to the net debt on Global Networks.
In rejecting Paramount’s offer, the Warner board said Wednesday that Paramount Skydance has “consistently misled” WBD shareholders that the $40.7 billion of equity financing in its proposed transaction is fully backstopped by the Ellison family.
Per Paramount, the equity financing is backed by the Ellison family trust, which contains over $250 billion of assets including 1.16 billion Oracle shares. But WBD said the revocable trust is “no replacement for a secured commitment by a controlling stockholder” and that its assets and liabilities are “not publicly disclosed and are subject to change.”
Paramount on Wednesday also countered that it is “highly confident” its deal would pass through regulatory approval, despite the fact that President Donald Trump distanced himself from the Ellisons on Tuesday and Jared Kushner’s Affinity Partners pulled out of backing the Paramount bid.
In Paramount’s response to the WBD board’s rejection, they once again took issue with Warner not responding to their $30-per-share offer, a response that board chair Samuel Di Piazza Jr. said was not necessary.
“We told all the bidders on that Monday to submit their best shot. We didn’t say best and final, we said, submit your best shot, and we have no obligation to come back and renegotiate it,” he told CNBC.
But Paramount isn’t going down without a fight.
“WBD seeks to mislead its shareholders into believing this is a complicated question about legal documents,” the company said in response on Wednesday. “In reality, it is all quite simple: $30 in cash fully backstopped by a well-capitalized trust (in existence for approximately 40 years) of one of the most well-known founders and entrepreneurs in the world, Larry Ellison. Yet from mid-September all the way through to December 4, what is glaring is the absolute resistance on the part of WBD to even engage in a single negotiating session with Paramount or its advisors, and a refusal even to provide a mark-up of any transaction document.”
The press release concluded with a call to WBD shareholders to tender their shares:
“WBD shareholders have the ultimate power to determine the future of WBD. With this in mind, Paramount has acted to provide WBD shareholders with transparency and a voice by taking its superior offer directly to them. The Netflix transaction requires approval by WBD shareholders at a special shareholder meeting,” Paramount said.
“But there is no reason to wait months to have your voice heard. Paramount urges WBD shareholders to send a clear message now to the WBD Board that they prefer Paramount’s superior offer by tendering their shares today.”
