It’s a bidding war. David Ellison’s Paramount went on the offensive on Monday, launching a hostile offer to take over all of Warner Bros. Discovery, go directly to its shareholders and appeal to Hollywood that it’s ownership will be better for the industry.
“The Paramount offer for the entirety of WBD provides shareholders $18 billion more in cash than the Netflix consideration,” the Ellison-owned company stated. “WBD’s Board of Directors recommendation of the Netflix transaction over Paramount’s offer is based on an illusory prospective valuation of Global Networks that is unsupported by the business fundamentals and encumbered by high levels of financial leverage assigned to the entity.”
“WBD shareholders deserve an opportunity to consider our superior all-cash offer for their shares in the entire company,” Ellison said. “Our public offer, which is on the same terms we provided to the Warner Bros. Discovery Board of Directors in private, provides superior value, and a more certain and quicker path to completion. We believe the WBD Board of Directors is pursuing an inferior proposal which exposes shareholders to a mix of cash and stock, an uncertain future trading value of the Global Networks linear cable business and a challenging regulatory approval process. We are taking our offer directly to shareholders to give them the opportunity to act in their own best interests and maximize the value of their shares.”
The tender offer is for $30 per share, all in cash, a contrast to Netflix’s offer, which is a $27.75 mix of cash and some stock, with shareholders also getting a stake in the linear TV spinout. Netflix is also only buying WBD’s streaming and studios business, while Paramount is pursuing the whole company, making for a complicated comparison, depending on how you value the linear TV business.
Because it is a tender offer, Paramount will need to persuade shareholders to sell their stock to it, rather than sign off on the Netflix deal. The result will likely be a public, extended campaign from Paramount, Warner Bros. and Netflix to make their case.
To that end, Paramount launched a website called “StrongerHollywood,” which outlines the company’s offer and throws shade on Netflix’s deal, with Ellison arguing that a takeover by his company will be better for the industry.
“We believe our offer will create a stronger Hollywood,” Ellison wrote. “It is in the best interests of the creative community, consumers and the movie theater industry. We believe they will benefit from the enhanced competition, higher content spend and theatrical release output, and a greater number of movies in theaters as a result of our proposed transaction. We look forward to working to expeditiously deliver this opportunity so that all stakeholders can begin to capitalize on the benefits of the combined company.”
More to come.
