February 24 – Paramount Skydance submitted a revised offer to buy Warner Bros. Discovery, both companies confirmed Tuesday, as the owner of broadcaster CBS makes a last-ditch effort to stop media giant Netflix from buying the iconic Hollywood studio.
A source familiar with the matter told Reuters on Monday that the latest offer exceeds Paramount’s previous bid of $30 per share of $108.4 billion, including cash or debt, for the entire Warner Bros. However, the exact details of the proposal could not be known.
Paramount made its bid after a week of talks between the companies to address the Warner board’s concerns with previous bids, which they have rejected in favor of Netflix’s $27.75 per share, or $82.7 billion, deal for its studio and streaming assets.
“The Netflix merger agreement will remain in effect and the board will continue to recommend in favor of the Netflix transaction,” Warner Bros. said in a statement.
Paramount said its offer came after a week of discussions with the Warner board, which had a waiver under its merger agreement with Netflix to join forces with a rival bidder. Netflix has the contractual right to match any higher offer.
Netflix did not immediately respond to a request for comment.
Netflix shares were up 2% in afternoon trading, while Warner Bros. gained 0.8% and Paramount was slightly lower.
Analysts at MoffettNathanson said Paramount’s $34 per share offer would end a bidding war and “avoid further debate over the value of Discovery Global.”
Netflix’s bid for the Warner Bros. film and television studios, its extensive content library and its HBO Max streaming service does not include Warner’s cable television networks, which will be spun off into a separately traded company, Discovery Global.
Warner’s board estimates that Discovery Global could receive between $1.33 per share and $6.86 per share, which would help raise the total return to shareholders above Paramount’s earlier $30 per share offer.
According to the agreement announced in December, if Warner Bros. decides the new Paramount bid is better than the Netflix deal, the streaming leader will have four days to match that bid.
High-stakes battle for Hollywood’s crown jewel
Any deal would reshape Hollywood’s power structure, handing over the industry’s most prestigious studios and an extensive content library as well as lucrative entertainment franchises like “Game of Thrones,” “Harry Potter” and DC Comics.
Netflix has ample cash and could raise its offer to own HBO Max. The company has argued that its deal provides better value to investors due to the spin-off of Warner Bros. Cable assets prior to the acquisition.
Paramount has offered to buy all of Warner Bros.’ assets, arguing that the cable properties are almost worthless.
The rival company, led by CEO David Ellison, has argued that it has a clearer path to US regulatory approval than Netflix.
To reassure investors, it has offered to cover the $2.8 billion break-up fee Warner Bros. would have to pay Netflix if the deal is canceled, and about $650 million more in cash for each quarter if the deal fails to close after this year.
Paramount left no doubt that it was increasing the pressure on Warner Bros.
As Warner’s board evaluates the new bid, Paramount said it is reaching out to Warner Bros. investors and urging them to vote against the deal with Netflix at next month’s special meeting.
Paramount also indicated that if Warner Bros. rejected the new bid, it would be prepared to launch a board challenge at this year’s annual meeting. One of its potential director candidates could be Matthew Halbower, chief executive of Pentwater Capital Management, one of Warner Bros.’s largest shareholders.
Separately, activist investor Ancora Holdings, which owns a small stake in Warner Bros., has stepped up pressure on the HBO owner, saying the company has failed to adequately engage with Paramount.
Warner Bros. said earlier this month it would hold a shareholder vote on the Netflix deal on March 20.
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