Just days after Warner Bros. Discovery’s (WBD) board of directors once again rejected Paramount Skydance’s amended tender offer, Paramount has filed a lawsuit against WBD and demanded the court reveal the terms of Netflix’s offer.
Netflix announced that it was going to buy Warner Bros, including the company’s games division, for $82.7 billion last month. Shortly thereafter, Paramount Skydance kicked off a hostile takeover bid for the entirety of Warner Bros Discovery, which its board swiftly rejected. This most recent rejection was an amendment to that bid.
Now, Paramount CEO David Ellison is suing to obtain further information about Warner Bros. Discovery’s billion-dollar acquisition agreement with Netflix and request the court “direct WBD to provide WBD shareholders […] what they need to be able to make an informed decision as to whether to tender their shares into our offer.”
“WBD has provided increasingly novel reasons for avoiding a transaction with Paramount, but what it has never said, because it cannot, is that the Netflix transaction is financially superior to our actual offer,” Ellison wrote in a letter not his own but Warner Bros. Discovery’s shareholders earlier today.
“Our $30 per share in cash is simply more than Netflix’s complex multi-variable consideration comprised of (a) $23.25 in cash plus (b) a number of Netflix shares currently worth $4.11 (at Friday’s close) plus (c) the to-be-issued Global Networks equity which we have analyzed as having zero equity value.
“In addition to not disclosing the value of the to-be-issued Global Networks spin off, WBD has not disclosed the mechanism by which any debt transferred from Global Networks to the Streaming & Studios segment reduces the cash and stock consideration payable to you.”
Consequently, Paramount filed suit earlier today in Delaware Chancery Court to “ask the court to simply direct WBD to provide this information so that WBD shareholders have what they need.”
Ellison said these actions had not been taken “lightly” but were done in the hope of securing “constructive discussions with WBD’s Board to reach an agreement.”
“The best outcome for [shareholders] and for us would be if WBD’s Board would exercise the right it has under the Netflix Agreement to engage with Paramount,” he concluded. “If it does so, we will be open and constructive to secure the best path forward for WBD and each of you. We have demonstrated our willingness to listen carefully to any feedback we receive from WBD’s Board and to respond by offering reasonable solutions – and that remains our mindset and approach.”
