The Board of Directors at Warner Bros. Discovery has unanimously recommended that shareholders reject the hostile tender offer from Paramount Skydance, reaffirming its support for the merger agreement with Netflix announced earlier this month.
In a letter to shareholders, the board described Paramount’s $108.4 billion all-cash offer as “illusory” and fraught with risk, noting that it lacks a committed equity backstop from the Ellison family and relies on opaque financing structures.
The board emphasized that the Netflix deal, valued at approximately $82.7 billion including stock and cash, offers superior long-term value and greater certainty for shareholders.
The board raised specific concerns about Paramount’s financing, pointing out that the proposed $40.65 billion equity commitment is backed by a revocable trust with capped liability, leaving Warner Bros. Discovery shareholders exposed if the deal fails.
By contrast, the Netflix merger is fully backed by a company with an investment-grade balance sheet and a market capitalization exceeding $400 billion.
The board also dismissed Paramount’s claims of lower regulatory risk, stating that both transactions face similar scrutiny.
However, it noted that Netflix has agreed to a significantly higher termination fee of $5.8 billion compared to Paramount’s $5 billion.
Key Takeaways:
- Warner Bros. Discovery board unanimously rejected Paramount’s tender offer.
- The board reaffirmed its support for the merger with Netflix.
- Concerns were raised over Paramount’s financing and regulatory risks.
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