WBD Negotiates with Paramount While Planning March Vote on Netflix Agreement
Warner Bros. Discovery Engages in Merger Discussions with Paramount
Warner Bros. Discovery (WBD) has announced a seven-day negotiation period, concluding on February 23, to deliberate with Paramount regarding a potential merger. This timeline aims to offer clarity to WBD stockholders while allowing Paramount’s Skydance unit (PSKY) to present its most competitive offer.
Simultaneously, WBD is advocating for its proposed merger with Netflix, planning a special shareholders’ meeting set for March 20 to finalize that transaction. Definitive proxy materials related to this meeting were sent out on Tuesday.
On February 10, Paramount revised its offer to WBD, maintaining an all-cash bid of $30 per share and addressing several concerns previously raised by Warner. A senior representative from PSKY indicated to a WBD director that, should discussions proceed, the company could elevate its offer beyond the current amount.
WBD acknowledged that while PSKY’s February 10 communication showed a willingness to resolve issues, it did not adequately address concerns in the proposed merger agreement, leaving WBD with vague assurances. "During this seven-day period,” WBD stated, “the two companies will discuss the deficiencies that remain unresolved and clarify certain terms of PSKY’s proposed merger agreement."
WBD expressed its eagerness to engage, stating: “We welcome the opportunity to engage with you and expeditiously determine whether PSKY can deliver an actionable, binding proposal that provides superior value, transaction certainty and interim protection for WBD’s businesses to Warner Bros. Discovery shareholders.”
In contrast, Paramount has criticized WBD for what it perceives as a biased negotiation process. The Ellison family, representing Paramount, contends that they have addressed every concern raised by Warner.
Amid these negotiations, WBD confirmed that Netflix granted it a limited waiver, permitting engagement with Paramount to clarify ongoing discussions as outlined in their merger agreement. Netflix’s recent statement emphasized confidence in the value of its own proposed merger while recognizing the distractions posed by PSKY’s bid. They noted: "Accordingly, we granted WBD a narrow seven-day waiver of certain obligations under our merger agreement to allow them to engage with PSKY to fully and finally resolve this matter.” The company retains matching rights concerning any new offers.
In preparation for discussions, WBD outlined key issues requiring attention, along with drafts of full transaction agreements for PSKY to formally revise its proposal. WBD’s expectations include definitive terms from PSKY related to refinancing costs and consent, material adverse effects based on the performance of Discovery Global, and more.
Chief Executive Officer David Zaslav reflected on the company’s priorities, stating, “Throughout the entire process, our sole focus has been on maximizing value and certainty for WBD shareholders.” He emphasized ongoing efforts to highlight deficiencies in PSKY’s offers while remaining committed to evaluating any actionable proposals.
Warner board chair Samuel Di Piazza reaffirmed support for the Netflix merger, calling it the most beneficial option for shareholders, citing regulatory approval prospects, job protection, and expanded production capacity.
As the discussions unfold, WBD’s board remains focused on ensuring any final proposal from PSKY meets their standards for value and certainty for shareholders.
