Showing no signs of withdrawing from the Warner Bros battle, Paramount Skydance, as per global news agencies, has reiterated that its $108.4 billion acquisition proposal offers greater value than a competing deal from Netflix.
The network has argued that the cable business at the centre of Netflix’s proposal holds little to no standalone value.
Warner Bros rejects revised bid
Warner Bros Discovery on Wednesday rejected Paramount’s revised hostile bid, which included $40 billion in equity, personally backed by Larry Ellison, along with $54 billion in debt. Ellison is the father of David Ellison, Paramount’s chief executive.
In a statement issued on Thursday, Paramount said the equity component linked to the proposed cable spinoff—referred to as Discovery Global—would likely be worth nothing if the business were valued in line with Versant. The company added that there were strong reasons why the spinoff could trade at an even steeper discount compared to Versant.
Paramount also warned that Netflix’s offer structure could significantly reduce the cash ultimately received by Warner Bros Discovery shareholders. According to the company, taking on additional debt to support the Netflix transaction could lower the shareholder payout to around $20 per share, compared with the $23.25 per share implied under Paramount’s current proposal.
Following the developments, shares of Warner Bros Discovery and Netflix each fell by less than 1 per cent, while Paramount’s stock rose 0.6 per cent.
Warner Bros Discovery’s board on Thursday unanimously turned down Paramount Skydance's latest attempt to acquire the studio, saying its revised $108.4 billion hostile bid amounted to a risky leveraged buyout that investors should reject.
In a letter to shareholders on Wednesday, Warner Bros' board said Paramount's offer hinges on "an extraordinary amount of debt financing" that heightens the risk of closing. It reaffirmed its commitment to streaming giant Netflix's $82.7 billion deal for the film and television studio and other assets.
The Warner Bros board voted against the $30-per-share cash offer on Tuesday, telling shareholders that Paramount's financing plan would saddle the smaller Hollywood studio with $87 billion in debt once the acquisition closed, making it the largest leveraged buyout in history.