Bidding war: New Paramount offer makes Warner reconsider

Paramount appears to be making progress in the bidding war for media company Warner Bros. Discovery: According to a Bloomberg report, Paramount's latest offer might now persuade the Warner board to officially enter into negotiations with Paramount.

So far, the Warner board has been united behind Netflix's takeover offer, which board members continue to publicly recommend to shareholders. Warner has so far firmly rejected hostile takeover bids from Paramount. However, according to Bloomberg, the media company is now considering opening talks with Paramount. This was reported by unnamed insiders to the business magazine.

Paramount submitted its latest takeover offer for Warner Bros. last week. Among other things, Paramount offers to also pay the sum of 2.8 billion US dollars that Warner has guaranteed to Netflix if the takeover does not materialize.

Concerns remain

According to Bloomberg, Warner still has doubts about the Paramount offer. Among other things, the board had criticized the financing of the deal, which involves private equity firms as well as the Saudi sovereign wealth fund. Warner is particularly concerned about the low equity stake that Paramount itself is contributing. However, according to Bloomberg, the Warner board sees the new offer at least as an opportunity to negotiate a better deal – possibly also with Netflix. Furthermore, Warner is under pressure from shareholders to take the Paramount offer seriously.

Netflix has also already improved its offer for Warner: The deal that Netflix had originally negotiated with Warner provided shareholders with a mix of cash and Netflix shares. For each Warner share, shareholders were to receive 23.25 US dollars in cash and 4.50 US dollars in Netflix shares. In the new deal structure, Warner shareholders will not receive any Netflix shares; instead, shareholders will receive the 27.75 US dollars solely in cash. The new structure is simpler, more secure, and accelerates the path to closing the takeover, Netflix and Warner explained the new agreement.

According to Bloomberg, both Netflix and Paramount have signaled their willingness to further improve their offers. While Netflix is only interested in the entertainment division, including the streaming service HBO Max, Paramount wants to take over the entire company. Paramount is therefore also interested in Warner Bros. Discovery's news business, which includes CNN and TNT.

(dahe)