Warner Bros plans to reject Paramount’s latest hostile bid

Warner Bros Discovery plans to reject the latest takeover proposal from Paramount, even after billionaire Oracle co-founder Larry Ellison agreed to personally backstop the $108bn hostile bid.

WBD’s board still views the $83bn deal it agreed with Netflix in early December as superior to Paramount’s proposal, according to people familiar with the matter.

These people cautioned that WBD had still not made a final decision.

The board’s deliberations come as Netflix and Paramount are sparring to take over one of Hollywood’s best known studios and streaming companies.

Paramount swooped in with a hostile bid for WBD on December 8, just days after Netflix had agreed to buy the group. WBD later rejected that offer, calling it “inferior” to Netflix’s deal and risky since it was not guaranteed by Ellison’s personal fortune.

Paramount said on December 22 that Ellison had agreed to provide an “irrevocable personal guarantee” covering $40.4bn of equity financing for its $108bn bid, which is being led by his son David Ellison.

Paramount also offered to increase the break fee payable if regulators block the transaction to $5.8bn, up from $5bn, matching what Netflix has agreed to pay if the deal is blocked for antitrust reasons.

Despite the added financing assurance, Paramount did not raise its offer price, leaving its proposal unchanged at $30 a share in cash to buy the entire company, including legacy television and cable assets such as CNN, TNT and Discovery Channel. The Netflix deal would involve spinning off those legacy assets into an independent company.

WBD’s board is looking for Paramount to increase its bid in order to unlock new negotiations, according to a person briefed on the matter.

The person added that WBD’s directors felt the amendments made by Paramount were insufficient to terminate its deal with Netflix, which would include a $2.8bn break fee payable to the streaming company.

CNBC was first to report on WBD’s plans to reject the new offer.

A person close to Paramount said last week that its revised offer was intended to push WBD back to the negotiating table. The person added that if WBD showed “goodwill”, Paramount would be willing to increase the price.

Paramount has appealed directly to WBD’s shareholders to back its deal. WBD shareholders have until January 21 to tender their shares, an extension compared to the previous deadline of January 8.

WBD and Paramount declined to comment.