Warner Bros turns down Paramount offer even after Larry Ellison commits $40bn

Warner Bros Rejects Paramount's $108 Billion Takeover Bid Again

Warner Bros has once more turned down Paramount's aggressive $108 billion acquisition proposal, despite Oracle founder Larry Ellison offering a personal guarantee of $40 billion to support the deal.

The entertainment powerhouse stated that Paramount's improved offer does not serve the best interests of Warner Bros or its shareholders. Instead, Warner Bros reaffirmed its commitment to an $83 billion agreement with Netflix that was reached the previous month.

In a communication to its shareholders, Warner Bros criticized the bid for its unprecedented reliance on debt financing, which is being supported by three Gulf nations and the Ellison family.

The $30-per-share proposal was described as the largest leveraged buyout ever attempted.

This latest rejection is another blow to Paramount's attempts to disrupt Netflix's acquisition of Warner Bros, the studio behind iconic franchises like Harry Potter.

While this is the second public rejection, documents reveal that Warner Bros has privately dismissed several previous offers from Paramount and the Ellison group.

Warner Bros has accused Paramount of repeatedly providing misleading information to shareholders regarding the structure of its bid.

Following the initial rejection, Paramount returned with a revised offer just before the holidays, including Mr. Ellison’s promise of an “irrevocable personal guarantee” for the full $40 billion equity portion.

Nevertheless, Warner Bros maintained its reservations about the heavy debt involved in Paramount’s proposal.

Warner Bros also cautioned that accepting Paramount’s bid would result in $4.7 billion in costs, including a $2.8 billion break-up fee owed to Netflix.

Samuel A Di Piazza Jr, chairman of Warner Bros Discovery, commented: “The Board unanimously found that Paramount’s latest proposal is still inferior to our merger agreement with Netflix in several critical aspects.

“Paramount’s offer lacks sufficient value and includes a risky level of debt financing, which threatens the deal’s completion and fails to protect our shareholders if the transaction falls through.

“Our binding agreement with Netflix provides greater value and certainty, without exposing our shareholders to the significant risks and expenses associated with Paramount’s offer.”

Major Upheaval in Hollywood

Warner Bros is at the center of a dramatic takeover battle, marking one of the most significant shake-ups in the entertainment industry during the streaming era.

Under the terms of the Netflix agreement, Warner Bros Discovery will first separate its traditional networks division, which includes CNN. In contrast, Paramount’s bid seeks to acquire the entire company.

Regulatory and Industry Concerns

Executives have acknowledged that the Netflix merger could face up to 18 months of regulatory review, as it would unite two of the largest streaming platforms in the United States—Netflix and HBO Max.

Filmmakers and cinema operators have voiced worries that Netflix might reduce the number of theatrical releases, a claim Netflix has denied.

Paramount’s competing offer has also come under scrutiny due to approximately $24 billion in funding from the sovereign wealth funds of Saudi Arabia, Abu Dhabi, and Qatar.

The Ellison family is contributing $12 billion, while RedBird Capital—Paramount’s second-largest shareholder and a previous bidder for The Telegraph—is also supporting the offer.

Netflix welcomed Warner Bros’s decision to reject Paramount’s approach and confirmed that it has begun discussions with regulatory authorities, including the US Department of Justice and the European Commission.

Ted Sarandos and Greg Peters, Netflix’s co-chief executives, stated: “The Warner Bros board continues to fully endorse and recommend our merger agreement, recognizing it as the best proposal for shareholders, audiences, creators, and the wider entertainment sector.

“Together, Netflix and Warner Bros will combine complementary strengths and a shared dedication to storytelling.

“By joining forces, we will provide viewers with even more beloved series and films—both at home and in theaters—expand opportunities for creators, and help build a vibrant, competitive, and flourishing entertainment industry.”