Hedge fund Ancora Holdings has built an approximate $200 million position in Warner Bros. Discovery and plans to oppose a proposed deal that would sell the company's movie and television studios to Netflix, preferring instead an offer from Paramount Skydance, people familiar with the matter told the Wall Street Journal.
Ancora may make its stance public as early as Wednesday, according to those accounts. The hedge fund contends that Warner Bros. Discovery Inc did not adequately engage with the bid put forward by David Ellison's Paramount Skydance Corp.
Ancora's entry into the dispute introduces another source of uncertainty for Warner as it attempts to resolve the fate of its core studio operations.
Netflix and Paramount were reported to be the two leading suitors, with offers of $82.7 billion from Netflix and $108.4 billion from Paramount for the studio business. Paramount recently enhanced its proposal by pledging to pay shareholders additional cash for every quarter the transaction does not close and by offering to assume a breakup fee if Warner walks away from a Netflix deal.
According to the reports, Ancora has warned Warner that it will initiate a proxy contest if the company refuses to take Paramount's proposal into consideration. The hedge fund also plans to keep purchasing Warner shares.
A shareholder vote on the transaction is expected in March.
Warner's board has repeatedly turned down Paramount's overtures, having expressed a preference for Netflix on the grounds that the Netflix transaction delivers greater value, more secure financing and a clearer avenue toward regulatory approval. In response to Warner's rebuffs, Paramount launched a hostile approach, reaching out directly to shareholders and threatening to escalate a proxy fight.
Ancora's actions and Paramount's intensified campaign both increase the potential for a protracted fight over control of the studios. The situation leaves shareholders and market participants monitoring whether Warner's board will change course ahead of the scheduled vote in March or whether activist pressure and direct offers to shareholders will alter the current dynamics.
Note: This report reflects the information provided about the stake, the competing offers and the stated intentions of the parties involved. It does not add events or outcomes beyond those details.