The battle for Warner Bros. may be down to Netflix and Paramount, but the studio has a clear favorite. Earlier this month, Netflix bid $82.7 billion dollars for Warner Bros., jilting Paramount in the process. Paramount responded with a hostile takeover bid of $108.4 billion. Now, Warner Bros. is urging its shareholders to reject Paramount’s “illusory” offer.
“Following a careful evaluation of Paramount’s recently launched tender offer, the Board concluded that the offer’s value is inadequate, with significant risks and costs imposed on our shareholders,” reads a letter to shareholders from Samuel A. Di Piazza, Jr., the chair of Warner Bros. Discovery’s board of directors.
Although Paramount’s offer is higher, Warner Bros.’ contends that Paramount’s owners, the Ellison family, didn’t offer a “full backstop” commitment to provide the money to cover its offer and that it can walk away from the transaction without paying any penalty. By comparison, Netflix and Warner Bros. have a $5 billion breakup fee if their deal fails to close or meet regulatory approval. Warner Bros. also contends that the proposed Paramount deal will not be approved by regulators. Regardless, Netflix isn’t guaranteed to be approved either.
Warner Bros.’ guidance isn’t binding, and its shareholders could still reject the Netflix deal in favor of the higher bid from Paramount. But there may be reason to question Paramount’s ability to close the deal. Jared Kushner’s Affinity Partners apparently dropped its support for Paramount’s bid earlier this week. Kushner–who is the son-in-law of President Donald Trump–is also one of the backers of the deal to purchase EA by Saudi Arabia’s PIF, which may leave that country with almost full control of the company.
Whichever studio winds up with Warner Bros., they may also pick up the studio’s game developers as well as control of the DC, Harry Potter, and Mortal Kombat gaming franchises.
