Dec 17 (Reuters) – Warner Bros. Discovery’s board on Wednesday rejected Paramount Skydance’s $108.4 billion hostile offer, saying it had failed to provide adequate financing guarantees.
In a letter to shareholders, disclosed in a regulatory filing, the board wrote that Paramount had “consistently misled” Warner Bros. shareholders that its $30 per share cash offer was fully guaranteed, or “backed,” by the Ellison family, led by billionaire and Oracle co-founder Larry Ellison.
“This is not the case, and has never been the case,” the board wrote of the Paramount bid guarantee, noting that the offer presented “numerous and significant risks.”
Here’s what analysts and market experts are saying about the latest developments:
JEFFREY WLODARCZAK, CEO, PIVOTAL RESEARCH GROUP, NASHVILLE
“I think WBD’s concerns about the PSKY offer are legitimate given that the NFLX offer is firm and backed by NFLX, a massive company with significant ability to add leverage. It appears that the PSKY offer is not supported directly by the Ellison family and may be withdrawn. On the other hand, the PSKY offer is likely to pass before regulators while the NFLX offer will be “highly scrutinized.” But NFLX can overcome the obstacles by modifying the deal, for example by agreeing to sell HBO with short/medium term content deals to someone like Comcast.
“To close the deal, PSKY will likely have to get rid of the revocable trust (Ellison family backstop), stop the hostile bid, adjust to NFLX’s breakup fee (higher offer) and higher breakup fee. The problem for Ellison is that there is skepticism in the market from investors about Oracle’s data center strategy and that entity is already very heavily leveraged.”
PAOLO PESCATORE, ANALYST, PP FORESIGHT, LONDON
“This is a strong endorsement of Netflix’s offering and its future ability to execute as a combined entity.”
“Additionally, and more importantly, a better offering across the board in terms of value and regulatory approval. This seems to be the path of least resistance.”
“This now leaves Paramount in a precarious position, in the shadows and as a weaker player compared to its stronger rivals.”
“The ball is now firmly in Paramount Skydance’s court to significantly increase its offer. While this could still happen, it is unclear whether the outcome will change given the concerns.”
JONATHAN KEES, SENIOR RESEARCH ANALYST, DAIWA CAPITAL MARKETS, NEW YORK
“This will likely become a media and proxy spectacle, with each side presenting its case to shareholders, as well as the press. I expect many arguments and even accusations from each side to influence the public and shareholders. The fight is expected to culminate at WBD’s next shareholder meeting, which is expected to be held in early summer 2026.”
