The board of Warner Bros. Discovery (WBD) has rejected Paramount’s revised takeover bid, reiterating its preference for an existing merger agreement with Netflix and cautioning shareholders that Paramount’s proposal remains “too risky.”
In a letter to shareholders on Wednesday, the board described Paramount’s latest $30-per-share offer as “inadequate” and laden with uncertainty, despite assurances from Paramount that financing concerns had been addressed.
According to WBD, the bid resembles a leveraged buyout, requiring Paramount to assume more than $50 billion in new debt to complete the transaction. The board said this structure posed “materially more risk” compared with the “certainty” of the Netflix deal, which values WBD at $27.75 per share, including $23.25 in cash and the remainder in Netflix stock.
Paramount has sought to ease concerns by highlighting financial backing from Oracle billionaire Larry Ellison, who pledged $40.4 billion toward the proposed $78 billion transaction. His son, David Ellison, Paramount’s chief executive, initiated the bidding war last year with an unsolicited approach for WBD’s assets, including CNN.
WBD, led by CEO David Zaslav, has also raised issues over the valuation of its cable television assets, which are excluded from the Netflix deal but set to be spun off into a new company, Discovery Global. While WBD believes the unit holds significant standalone value, Paramount reportedly valued it at just $1 per share.
Paramount previously increased its breakup fee to $5.8 billion, matching Netflix’s agreed penalty, but did not raise its $30-per-share offer. With the latest rejection, Paramount now faces the choice of walking away, increasing its bid, or appealing directly to WBD shareholders through a hostile vote.
