Warner Bros.: Paramount makes another improved offer

In the bidding war for Warner Bros., Paramount has once again submitted an improved offer: Instead of $30 per share, Paramount is now willing to pay $31 per share. Paramount is also offering $7 billion in the event that a decided takeover cannot be completed due to regulatory hurdles.

In a statement, Warner Bros. confirms the new offer. The board will now review it, it says. It is not yet possible to say whether the Paramount offer is now better than the current, also improved offer from Netflix. Therefore, the recommendation for the Netflix deal remains for now.

However, the Warner board sees the possibility that the Paramount offer could indeed be formally superior to the Netflix deal. In that case, Netflix would have the option, stipulated in the takeover agreement, to follow suit with an also increased offer.

Back at the negotiating table

In principle, the Warner board prefers the Netflix deal, which is considered financially more stable in its overall package. The Warner board has sharply criticized Paramount's hostile takeover bid in the past – among other reasons, due to Paramount's low equity ratio. Furthermore, the involvement of private equity firms and the Saudi sovereign wealth fund causes concern among the board members.

Nevertheless, Paramount has managed to force Warner back to the negotiating table. The media company had accused Warner of never having sufficiently discussed its offer. So Paramount turned directly to shareholders, who in turn put pressure on Warner. Last week, Warner finally announced that it wanted to negotiate officially with Paramount. The company might also hope to be able to move Netflix to an increased offer again.

Current Netflix offer

The deal that Netflix originally negotiated with Warner provided for a mix of cash and Netflix shares for shareholders. For each Warner share, shareholders were to receive $23.25 in cash and $4.50 in Netflix shares. In the current deal structure, Warner shareholders will not receive any Netflix shares; instead, shareholders will receive the $27.75 solely in cash equivalents. The new structure is simpler, safer, and accelerates the path to closing the takeover; Netflix and Warner justified the new agreement.

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 the news business of Warner Bros. Discovery, which includes CNN and TNT. Paramount CEO David Ellison is the son of Larry Ellison, who is close to US President Donald Trump.

The vote by Warner shareholders on takeover offers is scheduled for March 20.

(dahe)