Warner Bros Discovery urges shareholders to reject ‘inadequate’ $108bn Paramount bid
Board resists hostile takeover despite $40bn personal guarantee from Larry Ellison
Warner Bros Discovery (WBD) has once again advised its shareholders to turn down what it described as an “inadequate” $108.4bn (£80bn) hostile takeover offer from Paramount Skydance, escalating a high-stakes struggle for control of the media group.
In a letter sent to investors on Wednesday, the board of Warner Bros Discovery said it had unanimously concluded that Paramount’s revised proposal still failed to offer sufficient value and carried unacceptable risks. The company said there remained “a lack of certainty” over Paramount Skydance’s ability to complete the transaction and warned that WBD shareholders would shoulder significant costs if the deal collapsed.
Paramount Skydance, which is backed by the Ellison family, has pushed back against claims that it misled investors by insisting it now has a “full backstop” for the bid. Last week Larry Ellison, the co-founder of Oracle, agreed to provide a personal guarantee of more than $40bn to support the offer, a move Paramount said addressed WBD’s concerns about financial flexibility.
The takeover battle is complicated by WBD’s existing $82.7bn agreement with Netflix, under which the streaming giant plans to acquire Warner Bros’ movie studios, the HBO cable network and the HBO Max streaming service. Paramount’s bid, by contrast, is for the entire WBD group, including CNN, Cartoon Network and the Discovery Channel.
WBD said that even with the Ellison guarantee, Paramount’s approach amounted to the largest leveraged buyout in history, a structure it argued introduced further risk. Walking away from the Netflix deal would also trigger a $2.8bn breakup fee. While Paramount Skydance has increased its own termination fee to $5.8bn to match Netflix’s, WBD estimates it would still face $4.7bn in additional costs if it accepted Paramount’s offer, including higher interest expenses and penalties linked to debt restructuring.
Both the Netflix transaction and Paramount’s hostile bid are widely expected to face intense regulatory scrutiny in the US and Europe. Lawmakers and industry figures have already voiced concerns, and Donald Trump has indicated he intends to take an interest in the process.
On Wednesday, Netflix co-chief executives Ted Sarandos and Greg Peters said WBD had recognised Netflix’s proposal as the “superior” option, one they argued would deliver the greatest value for shareholders, consumers and creators alike.
WBD confirmed it has already submitted mandatory pre-merger filings and is engaging with competition authorities, including the US Department of Justice and the European Commission. Paramount Skydance has not yet commented publicly on the rejection of its latest offer. It must now decide whether to press ahead with its hostile approach, appeal directly to WBD shareholders, or increase its current $30-a-share bid, which it has previously said is not its “best and final” proposal.
WBD shares slipped 0.6% in pre-market trading following the expected rebuff. Despite the volatility, the prolonged takeover battle has driven the company’s share price up by nearly 170% over the past year.
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