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FT editor Roula Khalaf selects her favorite stories in this weekly newspaper.
Warner Bros. Discovery plans to reject Paramount’s latest takeover offer, even though billionaire Oracle co-founder Larry Ellison has personally agreed to block a $108 billion hostile bid.
WBD’s board still views the $83 billion deal it agreed to with Netflix in early December as better than Paramount’s offer, according to people familiar with the matter.
These people cautioned that the WBD has still not taken a final decision.
The board’s deliberations come as Netflix and Paramount compete to acquire one of Hollywood’s best-known studios and streaming companies.
Paramount made a hostile bid for WBD on December 8, just days after Netflix agreed to purchase the group. WBD later rejected that offer, calling it “inferior” to the Netflix deal and riskier because it did not guarantee Ellison’s personal fortune.
Paramount said on December 22 that Ellison had agreed to provide an “irrevocable personal guarantee” covering $40.4 billion of equity financing for its $108 billion bid, which is being led by his son David Ellison.
Paramount also offered to increase the break fee payable if regulators blocked the transaction from $5 billion to $5.8 billion, which is equivalent to what Netflix would have agreed to pay if the deal was blocked for antitrust reasons.
Despite additional financing assurances, Paramount did not raise its offer price, leaving unchanged its offer at $30 per share cash to buy the entire company, which included legacy television and cable properties such as CNN, TNT, and the Discovery Channel. The Netflix deal would involve spinning off those legacy properties into an independent company.
According to a person with knowledge of the matter, WBD’s board is looking for Paramount to increase its bid to begin new talks.
The person said WBD directors felt the amendments made by Paramount were insufficient to end its deal with Netflix, which would have included a $2.8 billion break fee payable to the streaming company.
CNBC first reported on WBD’s plan to reject the new proposal.
A person close to Paramount said last week that its revised offer was aimed at bringing WBD back to the negotiating table. The person said that if WBD showed “goodwill”, Paramount would be willing to increase the price.
Paramount has appealed directly to WBD shareholders to support its deal. WBD shareholders have until January 21 to tender their shares, an extension from the previous deadline of January 8.
WBD and Paramount declined to comment.
