Bros.Warner Bros Discovery has again advised its shareholders to reject a revised takeover proposal from Paramount Skydance, calling the offer weak and risky.
Bros.This is the second rejection in under a month. Earlier in December, Warner Bros confirmed it had reached a major deal with Netflix to sell its film and streaming businesses for 72 billion dollars. Since then, the company’s board has remained firm in its support for that agreement.
In a letter sent to shareholders, the board said Paramount’s latest offer still fails to deliver enough value and does not qualify as a better option than the Netflix deal. The board added that the proposal creates serious financial risks and offers limited protection if the deal falls apart.
Board says Netflix deal offers more certainty
Bros.Samuel Di Piazza Jr., chairman of the Warner Bros board, said all directors continue to back the Netflix agreement without exception.
He explained that Paramount’s bid depends heavily on debt funding, which raises concerns about whether the deal could actually be completed. The board also warned that shareholders would be exposed to losses if the transaction collapsed.
According to the board, the Netflix agreement offers stronger value with far more certainty and avoids the risks tied to Paramount’s financing structure.
Key difference between the two offers
A major difference between the proposals is what each company wants to buy.
Netflix plans to acquire only the film and streaming units of Warner Bros. This would happen after the company splits into two separate divisions later this year.
-to-airParamount, however, is seeking to buy the entire Warner Bros. business. That includes cable networks like CNN and TNT, along with Discovery channels and free to air television assets across Europe.
Paramount’sParamount offer raises financial concerns
In December, Paramount proposed a deal worth more than 108 billion dollars for all of Warner Bros. The board rejected it unanimously.
Bros.Paramount later adjusted its proposal, but Warner Bros said the updated version still falls short and is not comparable to the Netflix deal.
Bros.One major issue is the breakup fee. If Warner Bros walked away from its Netflix agreement, it would owe Netflix 2.8 billion dollars.
The board also highlighted that Paramount’s market value stands at about 14 billion dollars, yet the acquisition would require more than 94 billion dollars in combined debt and equity financing. This level of borrowing, the board said, significantly increases the chance that the deal could fail.
Paramount yet to respond
Bros.Warner Bros said Paramount was given clear guidance on how to improve its offer but repeatedly failed to do so.
Paramount has been contacted for comment.
Earlier this month, Netflix co-chief executive Ted Sarandos said the Netflix-Warner Bros. deal clearly serves the best interests of shareholders.
