Warner Bros. Discovery is preparing to tell its shareholders to reject Paramount’s latest offer and back its existing deal with Netflix instead. People familiar with the matter say the company could make this recommendation as soon as Wednesday.
Netflix has agreed to buy Warner’s studios and HBO Max business for $27.75 per share using a mix of cash and stock. Paramount, led by David Ellison, has made a competing offer of $30 per share in cash for the entire company. Warner’s shares have been trading close to that level, suggesting investors expect Paramount to raise its bid. The stock slipped to $28.90 after reports that Warner plans to support the Netflix deal.
Warner has privately raised concerns about how solid Paramount’s financing is. Part of Paramount’s plan relies on backing from David Ellison’s father, Larry Ellison. Another backer, Affinity Partners, linked to Jared Kushner, has stepped away, saying the situation has changed.
Paramount’s tender offer expires on January 8, giving it time to decide whether to improve its bid. Some Warner investors have said they would consider tendering their shares if Paramount offers more.
Both possible deals face questions from antitrust regulators under President Trump. Netflix’s deal is expected to draw close review, while Netflix’s own shareholders have already reacted negatively to the idea of a higher offer.
This rejection may make Netflix happy but we are not sure how the industry and Warner Bros.’ future might look. Nobody is sure why it is happening the way it is, but senior officials at Warner Bros must be upto something.
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