Warner Bros. plans to reject Paramount's latest offer despite Ellison's guarantees - FT
Kyiv • UNN
Warner Bros. Discovery plans to reject Paramount's latest $108 billion offer, even after Larry Ellison agreed to personally guarantee the deal. The WBD board considers a deal with Netflix more favorable, despite increased termination fees and financing guarantees from Paramount.
Warner Bros. Discovery plans to reject the latest takeover bid from Paramount, even after Oracle co-founder billionaire Larry Ellison agreed to personally guarantee the $108 billion deal, the Financial Times reports, writes UNN.
Details
According to sources familiar with the situation, the WBD board of directors still considers the $83 billion deal with Netflix in early December more favorable than Paramount's offer.
These sources warned that WBD has not yet made a final decision.
Board discussions are taking place amid a battle between Netflix and Paramount to acquire one of Hollywood's most iconic studios and streaming companies.
Paramount made a hostile takeover bid for WBD on December 8, just days after Netflix agreed to buy the group. WBD later rejected the offer, calling it "less favorable" than the Netflix deal and risky because it was not guaranteed by Ellison's personal wealth.
On December 22, Paramount announced that Ellison had agreed to provide an "irrevocable personal guarantee" of $40.4 billion in equity financing for its $108 billion offer, led by his son David Ellison.
Paramount also offered to increase the termination fee payable in the event of regulatory blocking of the deal to $5.8 billion from $5 billion, matching the amount Netflix agreed to pay if the deal was blocked for antitrust reasons.
Despite additional financing guarantees, Paramount did not raise the price of its offer, leaving it unchanged at $30 per share in cash for the purchase of the entire company, including traditional television and cable assets such as CNN, TNT, and Discovery Channel. The Netflix deal involves spinning off these traditional assets into an independent company.
According to a source familiar with the situation, the WBD board of directors expects Paramount to raise its offer to initiate new negotiations.
The source added that WBD management considered the amendments made by Paramount insufficient to break the deal with Netflix, which provides for a $2.8 billion compensation payment to the streaming company.
A source close to Paramount said last week that the revised offer was intended to push WBD into negotiations. The source added that if WBD showed "good faith," Paramount would be willing to raise the price.
Paramount has appealed directly to WBD shareholders to support the deal. WBD shareholders have the right to sell their shares until January 21, an extension from the previous January 8.