Warner Bros. Discovery shareholders are being asked to reject Paramount Skydance’s $77.9 B all-cash bid in favor of a $72 B cash-and-stock offer from Netflix, according to a board letter.
The Offers and Board Recommendation
The Warner board sent a letter to shareholders on Wednesday saying Paramount’s “inferior” offer carries “significant risks and costs,” largely because it relies heavily on borrowed money. In contrast, the Netflix proposal is backed by a company worth more than $400 billion.
Offer Details and Stock Reaction
Netflix is offering $23.25 in cash and $4.50 in Netflix shares for each Warner share, while Paramount is offering $30 in cash. Warner’s stock fell more than 2 % to $28.21, Paramount shares dropped 5.4 %, and Netflix shares rose 0.2 %. An acquisition by Netflix would only be completed after Warner finalizes its planned separation of cable operations.
Regulatory and Foreign Investor Concerns
Both bids will face intense scrutiny from U.S. regulators. The Warner board cited foreign investment as a concern, noting that Paramount’s offer is backed by an Ellison family trust and that the sovereign wealth funds of Saudi Arabia, Abu Dhabi and Qatar are backing the bid. “The same U.S. officials and regulators who’ve sounded alarms about China’s influence on TikTok should be crying foul here,” said Mike Proulx, vice president and research director at Forrester.
Key Takeaways
- Warner shareholders have until Jan. 8 to vote on Paramount’s offer.
- The Netflix deal includes a cash-and-stock component valued at $72 B.
- Regulatory approval will be required for both bids, with foreign investor involvement raising additional concerns.
Warner’s board’s letter underscores the potential risks of Paramount’s offer and frames the Netflix bid as better aligned with shareholders’ interests and the company’s audiences.
