Warner Bros rejects latest hostile takeover bid from Paramount

Warner Bros Discovery Rejects Paramount’s Hostile Bid, Citing High Debt Financing

The board of Warner Bros Discovery has unanimously rejected Paramount Skydance’s latest attempt to acquire the studio, citing concerns over the high level of debt financing involved in the deal. In a letter to shareholders on Wednesday, the WBD board stated that Paramount’s revised $108.4 billion hostile bid amounts to a risky leveraged buyout that investors should reject.

The WBD board expressed its commitment to Netflix’s $82.7 billion deal for the film and television studio and other assets, which it considers superior. Some investors have pushed back on Warner Bros’ decision, with Pentwater Capital Management CEO Matthew Halbower stating that the media giant’s board made an error by not considering Paramount’s bid.

Paramount proposed a financing plan that would saddle the smaller Hollywood studio with $87 billion in debt once the acquisition closes, making it the largest leveraged buyout in history. The Warner Bros board noted that this would increase the risk of closing and put significant pressure on WBD shareholders.

The revised Paramount offer was amended to include a personal guarantee from Oracle’s billionaire co-founder Larry Ellison, who is also Paramount’s CEO. However, the WBD board stated that this did not alleviate its concerns over the deal’s economic viability.

Warner Bros Chairman Samuel Di Piazza said that the company remains open to a transaction with the Ellison-led firm but emphasized the need for a compelling offer. The decision keeps Warner Bros on track to pursue the Netflix deal, which has a $400 billion market value and investment-grade credit rating.

In a statement, Netflix co-CEOs Ted Sarandos and Greg Peters welcomed Warner Bros’ decision, citing the streaming giant’s deal as the superior proposal that will deliver the greatest value to its stockholders.

Source: Al Jazeera