Los Angeles, US — Warner Bros Discovery’s board rejected Paramount Skydance’s $108.4bn hostile bid on Wednesday, saying it failed to provide adequate financing assurances. In a letter to shareholders, disclosed in a regulatory filing, the board wrote that Paramount had “consistently misled” Warner Bros shareholders that its $30-per-share cash offer was fully guaranteed, or “backstopped,” by the Ellison family, led by billionaire and Oracle CEO Larry Ellison. “It does not, and never has,” the board wrote of the guarantee of Paramount’s offer, noting that the offer posed “numerous, significant risks”.
Warner Bros’ board also said it found Paramount’s offer “inferior” to the merger agreement with Netflix. The streaming giant’s $27.75 per share offer for Warner Bros’ film and television studios, its library and the HBO Max streaming service is a binding agreement that requires no equity financing and has robust debt commitments, the board wrote. Paramount and Netflix did not immediately respond to Reuters requests for comment.
Warner Bros shares were down 0.5% at $28.7 in premarket trading, while Netflix gained 1.7% and Paramount fell 2.2%. Last week, Paramount took its case directly to Warner Bros shareholders, arguing that it has arranged “air-tight financing” to support its bid, with $41bn in new equity assured by the Ellison family and RedBird Capital, and $54bn of debt commitments from Bank of America, Citi and Apollo. The Warner Bros Discovery board countered on Wednesday that Paramount’s most recent offer includes an equity commitment “for which there is no Ellison family commitment of any kind,” but rather the backing of “an unknown and opaque” Lawrence J Ellison Revocable Trust, whose assets and liabilities are not publicly disclosed and are subject to change.
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“Despite having been told repeatedly by WBD how important a full and unconditional financing commitment from the Ellison family was … the Ellison family has chosen not to backstop the PSKY offer,” the Warner Bros board wrote. “A revocable trust is no replacement for a secured commitment by a controlling shareholder.” Paramount has submitted a total of six bids to acquire the entire Warner Bros studio, including its television networks, including CNN and TNT Sports.
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