Warner Bros. Discovery Urges Shareholders to Reject Paramount Offer

Warner Bros. Discovery advised its shareholders on Wednesday to reject Paramount’s latest takeover offer, arguing that even a personal commitment from one of the world’s richest men could not make up for the bid’s complex financing and saying the blockbuster deal it reached with Netflix last month posed less risk.

The move follows Warner’s December agreement to sell much of its business to Netflix for $83 billion. Paramount, led by chief executive David Ellison and supported by his father Larry Ellison, has mounted a hostile bid and presented a proposal that includes a reported $40 billion personal equity guarantee from Larry Ellison and about $54 billion in debt financing.

The Warner board cited concerns that Paramount, with a market capitalization around $13 billion and a credit rating a notch above junk, would leave WBD shareholders with greater risk, writing that the proposal "poses materially more risk for WBD and its shareholders." The board also highlighted proposed restrictions from Paramount on Warner’s operations before closing, including limits on carving out its cable unit and on refinancing a $15 billion bridge loan, and warned shareholders could be left with a business constrained for up to 18 months if the deal failed.

Paramount must now decide whether to raise its offer or continue to press Warner shareholders that its acquisition is superior to Netflix’s.

Key Topics

Business, Warner Bros. Discovery, Paramount, Netflix, David Ellison, Larry Ellison