Warner Bros. Discovery Inc. is expected to once again reject a takeover bid from Paramount Skydance Corp., even after the rival media company amended the terms of its proposal, according to a report by Bloomberg.
According to several reports, the Warner Bros. Discovery board has not reached a final decision but is scheduled to meet next week to review the offer. The amended proposal is not expected to sway directors, who continue to view the bid as financially inferior to an agreement the company already reached with Netflix.
Paramount Skydance went public earlier this month with a $30-per-share all-cash offer for Warner Bros. Discovery, a move that came just days after Warner Bros. agreed to sell its studio and streaming assets to Netflix. Since then, Paramount has revised its proposal twice, most recently adding assurances around financing in an effort to strengthen its position.
Those assurances include a personal guarantee from billionaire Larry Ellison, who pledged $40.4 billion in equity financing and related commitments to support the deal. Ellison, along with his son David, controls Paramount Skydance after taking over the company in August.
Despite those revisions, Warner Bros. Discovery’s board remains unconvinced. One of the primary sticking points is that Paramount has not increased the overall value of its offer. Directors are said to be waiting for improved financial terms. There are also structural concerns.
According to the reporting, board members are uneasy about how much control the Ellisons would exert over Warner Bros. Discovery’s debt management under a Paramount-led transaction.
In addition, Paramount has not committed to covering the breakup fee Warner Bros. Discovery would owe Netflix if it were to abandon that deal.
Warner Bros. Discovery has already made clear in regulatory filings that it views the Netflix transaction as the superior option. The company cited Netflix’s financial strength, clearer execution path and reduced risk profile as key advantages. Netflix, which has a market capitalization exceeding $400 billion, is widely viewed as the most valuable and stable company in the entertainment industry.
By contrast, Warner Bros. Discovery has expressed concern that Paramount Skydance would be highly leveraged following an acquisition and would likely pursue deeper cost cuts, including additional job reductions. Those concerns have weighed heavily in the board’s evaluation process.
Absent a higher bid or stronger guarantees, Warner Bros. Discovery’s board is expected to reaffirm its preference for Netflix and formally reject Paramount Skydance’s proposal when it meets next week.
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