WBD Board Tells Shareholders to Reject Paramount Offer

Warner Bros. Discovery’s board of directors unanimously recommended that the tender offer launched by Paramount Skydance on December 8 be rejected by shareholders.

“Following a careful evaluation of Paramount’s recently launched tender offer, the board concluded that the offer’s value is inadequate, with significant risks and costs imposed on our shareholders,” said Samuel A. Di Piazza, Jr., chair of the Warner Bros. Discovery board of directors. “This offer once again fails to address key concerns that we have consistently communicated to Paramount throughout our extensive engagement and review of their six previous proposals. We are confident that our merger with Netflix represents superior, more certain value for our shareholders, and we look forward to delivering on the compelling benefits of our combination.”

The December 8 Paramount Skydance offer was an all-cash $30-per-share deal, equating to an enterprise value of $108.4 billion, which it claimed is a better deal than that provided by Netflix.

In the letter to shareholders, the WBD board said that it had “determined that PSKY’s tender offer remains inferior to the Netflix merger.” Paramount Skydance’s “offer provides inadequate value and proposes numerous, significant risks and costs on WBD.”

The letter also claims that Paramount Skydance “has consistently misled WBD shareholders that its proposed transaction has a ‘full backstop’ from the Ellison family. It does not, and never has. PSKY’s most recent proposal includes a $40.65 bilion equity commitment, for which there is no Ellison family commitment of any kind.”

Further, it says that “none of these reasons will be a surprise to PSKY given our clear, and oft-repeated, feedback on their six proposals,” despite Paramount’s claims to the contrary.

Paramount sent a letter to Warner Bros. Discovery shareholders in response, affirming its commitment. “WBD seeks to mislead its shareholders into believing this is a complicated question about legal documents. 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 letter continued, “It is also noteworthy that the board of WBD failed to even make the determination that Paramount’s $30 per share all-cash offer ‘could reasonably be expected to lead to a superior proposal’ under WBD’s transaction agreement with Netflix. This failure is yet another example of WBD’s pattern of ignoring Paramount’s value-maximizing offer, perhaps in the hopes it will just go away. But Paramount is committed to its offer and looks forward to WBD shareholders choosing a Paramount transaction over Netflix.”

David Ellison, chairman and CEO of Paramount, added, “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. 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.”