The board of Warner Bros. Discovery (WBD) has unanimously turned down David Ellison’s $30 per share unsolicited bid, characterizing it as “inferior” to its existing agreement with Netflix and pointing to considerable risks and additional costs attached to the proposal.
Paramount, Ellison’s backer, now faces the challenge of convincing WBD shareholders to tender their shares at the current price or increase its offer above the $108 billion already on the table—a necessary move to tilt the acquisition talks in its favor.
Earlier in the month, Netflix submitted a cash-and-stock offer valued at $27 per share for Warner Bros’ non-cable operations. That bid placed Netflix as the favored option initially.
In a statement, Samuel A. Di Piazza, Jr., chair of WBD’s board, said, “Following a careful evaluation of Paramount’s recently launched tender offer, the Board concluded that the offer’s value is inadequate, with significant risks and costs imposed on our shareholders”. Di Piazza underscored that the offer failed to address longstanding concerns repeatedly raised to Paramount during the review of six prior proposals. “We are confident that our merger with Netflix represents superior, more certain value for our shareholders and we look forward to delivering on the compelling benefits of our combination,” he added.
Central to WBD’s hesitation are concerns about foreign financing and the backing of Oracle co-founder Larry Ellison. The company’s Wednesday filing reiterated that Ellison’s revocable trust as a backstop for the deal was inadequate because neither assets nor liabilities had been disclosed, and assets associated with the trust could be altered at any time.
WBD’s board also highlighted the risks associated with the involvement of sovereign wealth funds from the Middle East. According to documents, Saudi Arabia’s Public Investment Fund would contribute $10 billion, while Abu Dhabi and Qatar’s Investment Authority would each put forward $7 billion. These financing sources, WBD contends, present a level of uncertainty for stakeholders.
Additionally, WBD asserted that it does not see substantial regulatory differences between the proposed mergers with Netflix and Paramount.
