Paramount Gives Warner Bros. Discovery Shareholders More Time to Consider Hostile Offer
Paramount has announced a new deadline for Warner Bros. Discovery (WBD) shareholders to express their support for the company’s hostile takeover bid, extending the original deadline from Wednesday to February 20, according to an SEC filing.
Paramount CEO David Ellison, alongside his executive team and financial backers, has been actively engaging with WBD investors in recent weeks to encourage them to tender their shares in favor of Paramount’s offer.
The company plans to initiate a proxy fight aimed at electing board members who would support its bid. Thursday’s filing marks the first step in this anticipated campaign.
This move follows Netflix and WBD’s announcement last December of an $82.7 billion deal for Netflix to acquire WBD’s studios and streaming division. Paramount subsequently approached WBD shareholders directly, advocating for its own bid, which has an enterprise value of $108.4 billion. Paramount asserts that its $30-a-share offer is more likely to gain regulatory approval and is more beneficial to shareholders, given that it involves a complete acquisition of the company.
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Unlike Paramount’s proposal, Netflix’s deal would leave shareholders with a “stub” in Discovery Global, a division of WBD that manages a declining portfolio of linear TV networks. Paramount has valued this stub minimally, while both Netflix and the WBD board contend that the assets within Discovery Global, including CNN, hold significant value in the market. WBD is set to carry out a company split this spring.
A crucial question remains whether Paramount will increase its bid and how Netflix might respond. Since the news of the acquisition surfaced last fall, Netflix’s stock has fallen approximately 30%, raising concerns among analysts that the deal is a defensive strategy which could distract the leading streaming service for the next couple of years.
Amid this ongoing corporate battle, Paramount has filed a lawsuit against WBD in Delaware Chancery Court, aiming to compel the release of additional information that it claims shareholders deserve. In a recent SEC filing, Paramount acknowledged that WBD had, for the first time, partially disclosed critical information withheld from shareholders but noted that significant material data about Discovery Global is still missing.
The entertainment industry is closely monitoring the situation as Warner’s storied assets, including its film and TV studio and HBO, prepare for their fourth ownership change in a decade. The outcome of this takeover conflict, complicated further by connections to stakeholders associated with President Trump, could redefine the landscape of the industry, reminiscent of the major shifts following Disney’s acquisition of Fox.
While the valuations of the competing Warner offers remain unchanged, the financial structures have been adjusted to all-cash deals. In response to concerns from WBD’s board, billionaire Oracle co-founder Larry Ellison has pledged to personally guarantee a substantial portion of the Paramount offer.
