Uncategorized
Warner Bros. rejects revised Paramount bid as risky leveraged buyout
Listen to this article
Estimated 3 minutes
The audio version of this article is generated by AI-based technology. Mispronunciations can occur. We are working with our partners to continually review and improve the results.
Warner Bros. Discovery’s board has unanimously turned down Paramount Skydance’s latest attempt to acquire the studio, saying its revised $108.4-billion US hostile bid amounted to a risky leveraged buyout that investors should reject.
In a letter to shareholders on Wednesday, the company’s board said Paramount’s offer hinges on “an extraordinary amount of debt financing” that heightens the risk of closing. It reaffirmed its commitment to streaming giant Netflix’s $82.7-billion deal for the film and television studio and other assets.
Paramount and Netflix have been vying to win control of Warner Bros., and with it, its prized film and television studios and extensive content library. Its lucrative entertainment franchises include Harry Potter, Game of Thrones, Friends and the DC Comics universe, as well as coveted classic films such as Casablanca and Citizen Kane.
Paramount’s financing plan would saddle the smaller Hollywood studio with $87 billion in debt once the acquisition closed, making it the largest leveraged buyout in history, the Warner Bros. board told shareholders after voting against the $30-per-share cash offer on Tuesday. The letter accompanied a 67-page amended merger filing where it laid out its case for rejecting Paramount’s offer.
Paramount Skydance made a hostile takeover bid for Warner Bros. Discovery for $108 billion US just days after Netflix announced it made a $72-billion US deal with the legacy studio. It’s a move that even has U.S. President Donald Trump weighing in.
Late last month, Paramount announced an “irrevocable personal guarantee” from Oracle founder Larry Ellison — the father of Paramount CEO David Ellison — to back $40.4 billion in equity financing for the company’s offer. Paramount also increased its promised payout to shareholders to $5.8 billion if the deal is blocked by regulators, matching what Netflix already put on the table.
The battle for Warner and the value of each offer grows complicated because Netflix and Paramount want different things. Netflix’s proposed acquisition includes only Warner’s studio and streaming business, including its legacy TV and movie production arms and platforms like HBO Max.
But Paramount wants the entire company — which, beyond studio and streaming, includes networks like CNN and Discovery.
If Netflix is successful, Warner’s news and cable operations would be spun off into their own company, under a previously announced separation.
A merger with either company will attract tremendous antitrust scrutiny. Due to its size and potential impact, it will almost certainly trigger a review by the U.S. Justice Department, which could sue to block the transaction or request changes. Other countries and regulators overseas may also challenge the merger.