Acquisition of Warner Bros: the group rejects a new offer from Paramount and reaffirms its preference for Netflix

New setback for Paramount. The board of directors of the American film and television group Warner Bros Discovery (WBD) announced on Wednesday that it had “unanimously” rejected the improved takeover offer from its competitor Paramount, reaffirming its preference for the competing proposal from Netflix.

Paramount’s new offer “remains inferior to our merger agreement with Netflix on several key points,” Warner Bros. Chairman Samuel A. Di Piazza Jr. said.

Paramount did not increase the amount of its purchase offer, to $108 billion, but changed certain parameters, notably adding a personal guarantee of $40.4 billion from billionaire Larry Ellison, whose son David is at the head of Paramount.

An offer too risky

Warner’s rejection is motivated by “significant costs, risks and uncertainties” that Paramount’s offer entails, the group explains in a letter addressed to its shareholders.

Warner judges, for example, that the “extraordinary” amount of debt financing “increases the risk of failure of the transaction” compared to “the certainty of the merger with Netflix”.

However, if Paramount failed to finalize its offer, “WBD shareholders would suffer significant costs”, notes Warner, which leads it to say that Paramount’s offer is “neither superior, nor even comparable” to that of Netflix.

Netflix welcomes the decision

In a press release published immediately, the subscription video-on-demand platform welcomed the “complete” and “rigorous” analysis of the Warner board of directors.

Netflix is ​​only proposing to acquire the Warner Bros film studio and all of HBO (HBO Max channels and streaming platform) for $82.7 billion including debt (72 billion excluding debt).

The operation would take place after the split between this subset and a portfolio of channels, including CNN and Discovery, which would be housed in a new ad hoc listed company called Discovery Global. Paramount Skydance wants to get its hands on the whole thing.