Warner Bros. Discovery Inc is set to tell its shareholders that it will consider an upgraded takeover proposal from Paramount Skydance, even as the company has formally recommended a separate transaction with Netflix for portions of its business.
According to reports, Warner plans to inform investors before markets open on Tuesday that it will review the enhanced Paramount offer. That improved proposal is expected to exceed $31 per share, above the earlier $30-a-share bid originally put forward by Paramount Skydance to acquire the entire company.
By contrast, Netflix's proposal stands at $27.50 per share and is directed at acquiring Warner's film, television and HBO assets. Warner's board has formally recommended the Netflix proposal to shareholders and has scheduled a vote on that deal for March 20.
Negotiations between Warner and Paramount concluded after a week on Monday. If the Warner board ultimately favors Paramount's higher offer, the company will allow Netflix a four-day period to respond with a competing bid. That timeline is part of the procedural sequence tied to board determinations in this bidding contest.
The competing offers have intensified an already contentious takeover contest for Warner, a company whose storied studio and collection of media properties have attracted multiple suitors. Paramount's enhanced bid is reported to have the backing of several financial backers, including Oracle's chief executive Larry Ellison, RedBird Capital, and capital provided by sovereign wealth funds from Saudi Arabia, Qatar and Abu Dhabi.
While Warner's board has moved to recommend the Netflix transaction to shareholders, the decision to take the Paramount proposal under review introduces an additional layer of uncertainty into the process and could complicate the steps ahead for shareholders and bidders alike.
Summary
Warner will inform shareholders it plans to review a raised Paramount Skydance offer that reportedly tops $31 per share, even as it has formally recommended Netflix's $27.50-per-share bid for its film, TV and HBO assets. Negotiations between Warner and Paramount have just closed, and a board decision favoring Paramount would give Netflix four days to respond.
- Key points
- Warner is expected to notify shareholders it will consider Paramount's upgraded offer before markets open on Tuesday - sectors affected: media, capital markets.
- Paramount's new proposal is reported to be above $31 per share, up from an earlier $30-a-share bid; Netflix's competing offer is $27.50 per share for specific Warner assets - sectors affected: streaming, entertainment.
- If the board favors Paramount, Netflix will have four days to make a competing bid; procedural timing could influence market reaction - sectors affected: financial markets, M&A activity.
- Risks and uncertainties
- Reconsideration of the Paramount offer could complicate the vote previously scheduled for March 20, introducing timing and strategic uncertainty for shareholders - impacts governance and investor decision-making.
- The presence of multiple bidders and backers, including sovereign capital and private investors, creates uncertainty around final financing terms and deal structure - impacts M&A financing and media ownership concentration.
- If the board opts for Paramount, the four-day response window for Netflix adds short-term pressure on potential counteroffers and market pricing - impacts trading and valuation in media equities.
Tags: media, streaming, entertainment, mergers, technology