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It was telegraphed a mile away, but yesterday the Warner Bros. Discovery Board met, and they voted to reject the bid for Warner Bros. Discovery from Paramount Skydance and continue to favor the bid from Netflix.
The Hollywood Reporter is carrying the details. The report says that the revised offer filed on Christmas Eve was not enough. The board has released a letter this morning to its shareholders, recommending rejection of the new offer.
The improved Paramount offer was all cash, $30 per share, and underwritten by Larry Ellison himself, including the increased $5.8 billion termination fee. The letter said:
“Your Board unanimously determined that the PSKY amended offer remains inadequate particularly given the insufficient value it would provide, the lack of certainty in PSKY’s ability to complete the offer, and the risks and costs borne by WBD shareholders should PSKY fail to complete the offer.”
Warners referred to the deal as:
“…the largest LBO [leveraged buyout] in history…”
As a result, they determine that the risks are too high and financing arrangements don’t pass muster. In their analysis:
“…(the) aggressive transaction structure poses materially more risk for WBD and its shareholders when compared to the (conventionally structured) Netflix merger.”
Will David Ellison’s bellows of rage reach shareholders? Will they follow the advice of their board? Is Larry very dissappointed? This is like an episode of Succession!
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