The drama over Paramount Skydance’s hostile takeover bid for Warner Bros. Discovery continues. On Wednesday, the WBD board again unanimously recommended that its shareholders reject Paramount’s offer on the grounds that it was “inferior” to the Netflix deal.
On Wednesday morning, WBD’s board chair Samuel Di Piazza was quoted by CNBC as saying; “We have a signed merger agreement with Netflix, it’s a compelling value, a clear path to closing and protections for our shareholders if something stops the close, whatever that might be.”
When the Netflix deal was announced, PSKY made an offer to WBD shareholders to pay $30 a share in cash for all its assets, including its television networks. Around Christmas, PSKY sweetened the offer by announcing that it had secured the backing of Larry Ellison, the billionaire father of its CEO David Ellison.
In its most recent letter to its shareholders, the WBD board stated in part: “PSKY has repeatedly failed to submit the best proposal for WBD shareholders despite clear direction from WBD on both the deficiencies and potential solutions.” The letter went on to say that “The WBD Board, management team and our advisors have extensively engaged with PSKY representatives and provided it with explicit instructions on how to improve each of its offers. Yet PSKY has continued to submit offers that still include many of the deficiencies we previously repeatedly identified to PSKY, none of which are present in the Netflix merger agreement, all while asserting that its offers do not represent its ‘best and final’ proposal.
Pentwater Capital Management, which is WBD’s seventh largest shareholder, got into the act when its CEO Matthew Halbower told the WBD board that it erred in not considering Paramount’s revised offer. He said that Paramount’s $30-per-share offer was both “economically superior” and “superior in terms of regulatory risk.”
Halbower argued that the WBD board had “breached its fiduciary obligations” to its shareholders. “If Paramount goes away, then it is a lost opportunity,” he stated.
But the WBD board is sticking to its guns in recommending a rejection of Paramount’s offer. As its letter to shareholders concluded: “Your Board negotiated a merger with Netflix that maximizes value while mitigating downside risks, and we unanimously believe the Netflix merger is in your best interest. We are focused on advancing the Netflix merger to deliver its compelling value to you.”
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