Warner Bros. Discovery has advised its shareholders to turn down an updated bid from Paramount Skydance. This marks the second time in under a month that Warner Bros. has urged shareholders to reject Paramount’s offer, which they believe is not satisfactory.
Earlier, Warner Bros. announced a deal with Netflix, worth $72 billion, to buy its film and streaming divisions. The Warner Bros. board feels that the Paramount proposal lacks value and does not meet their standards for a strong offer.
Paramount claims that their bid is better than Netflix’s. They want to purchase all of Warner Bros., including major television channels like CNN and TNT. However, the Warner Bros. board prefers the Netflix deal due to fewer risks and a clearer path to closing. Samuel Di Piazza Jr., the board chair, stated that Paramount’s offer includes an excessive amount of debt, adding risks and costs for shareholders.
In December, Paramount suggested over $108 billion for the whole Warner Bros. company, but the board unanimously rejected this offer. Despite revising its proposal, Warner Bros. still doesn’t find it satisfactory, stating that Paramount has consistently missed opportunities to improve their bid.
Notably, if Warner Bros. accepts the Paramount deal, they would have to pay Netflix $2.8 billion for backing out of their agreement. Furthermore, Paramount’s current market value is only $14 billion, and they would need over $94 billion in financing for this acquisition. This raises significant concerns over the feasibility of the proposal.
Recent data shows that mergers and acquisitions in the entertainment sector have been volatile. According to a 2023 survey, about 60% of executives in the industry are concerned about the financial risks associated with large deals. This sentiment aligns with Warner Bros.’ decision to prioritize the Netflix agreement, which they believe provides more stability.
As the situation unfolds, Paramount’s efforts to acquire Warner Bros. appear increasingly challenging, particularly given the current market dynamics and internal assessments.
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