Warner Bros weighing revised bid from Paramount as bidding war escalates
Netflix will have a chance to match if Warner Bros deems new Paramount bid superior
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[LOS ANGELES] Warner Bros Discovery said on Tuesday (Feb 24) it was considering a new bid from Paramount Skydance without disclosing the value of the deal, as the CBS owner makes a last-ditch effort to thwart Netflix from buying the coveted Hollywood studio.
The latest offer is higher than Paramount’s previous bid of US$30 per share in cash, or US$108.4 billion including debt, for the whole of Warner Bros, a source familiar with the matter told Reuters on Monday.
The offer followed a week of talks between the companies to address concerns that prompted the HBO parent to reject previous Paramount bids in favour of Netflix’s US$27.75 per share, or US$82.7 billion, deal for its studio and streaming assets.
“The Netflix merger agreement remains in effect and the Board continues to recommend in favour of the Netflix transaction,” Warner Bros said in a statement.
Paramount said it had submitted a revised bid, while Netflix did not immediately respond to a request for comment.
Netflix shares were down nearly 1 per cent in early trading, while Warner Bros gained 0.8 per cent and Paramount was little changed.
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MoffettNathanson analysts have said an offer in the range of US$34 per share from Paramount would end the bidding war and “avoid further debate over Discovery Global’s value”.
Discovery Global could fetch between US$1.33 per share and US$6.86 a share, according to Warner Bros estimates.
If Warner Bros decides the new Paramount bid is superior to the Netflix deal, the streaming pioneer will have four days to respond, according to the agreement announced in December.
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Either deal will reshape the power structure of Hollywood by handing the suitor one the industry’s most coveted studios and an extensive content library, as well as major franchises such as “Game of Thrones”, “Harry Potter” and DC Comics. Netflix has ample cash and could bump up its offer for HBO Max owner. The company has argued its deal offers better value to investors in part due to a spinoff of the Warner Bros cable assets before the acquisition.
Paramount, which has offered to buy the whole of Warner Bros including the TV assets, believes that the cable assets are almost worthless.
The CBS owner, led by CEO David Ellison, believes it has a clearer path to US regulatory approval for a Warner Bros deal because of its close ties to the Trump administration.
To reassure investors, it has offered to cover the US$2.8 billion fee Warner Bros would owe Netflix if that deal is scrapped and to pay roughly US$650 million more in cash for each quarter the deal fails to close after this year. Warner Bros’ renewed talks with Paramount also follow pressure from Ancora Holdings after the activist investor built a roughly US$200 million stake in the HBO owner and accused the company of failing to adequately engage with Paramount.
The investor criticised the Warner Bros board for agreeing to an inferior deal and gambling on an uncertain spinoff. It plans to vote against the Netflix deal if Warner Bros refused to re-enter discussions with Paramount.
Warner Bros shareholders said earlier this month it would hold a shareholder vote on the Netflix deal on Mar 20. REUTERS
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