Paramount is continuing its efforts to acquire Warner Bros. Discovery (WBD), recently increasing the incentives in its takeover bid and extending the deadline for shareholders to tender their shares. The move comes as Paramount seeks to gain more support for its offer amidst competition from Netflix.
A Sweetened Offer
On Tuesday, Paramount announced it would add a “ticking fee” to its offer, amounting to 25 cents per share for each quarter after December 31st if the deal isn’t finalized by year-conclude. This totals a potential $650 million per quarter. Paramount likewise stated it would cover Warner Bros. Discovery’s $2.8 billion breakup fee owed to Netflix should the merger with the streaming giant fall through.
The base value of Paramount’s offer remains at $30 per share. Shareholders now have until March 2 to tender their shares. Paramount CEO David Ellison stated the added benefits demonstrate the company’s commitment to delivering value to WBD shareholders.
Shareholder Support and Rival Bids
Despite the increased incentives, Paramount is facing challenges in securing sufficient shareholder support. As of Monday, approximately 42.3 million Warner shares had been tendered, a decrease from over 168.5 million shares on January 21. With roughly 2.48 billion shares outstanding, Paramount needs more than 50% to gain control of WBD.
Warner Bros. Discovery’s leadership continues to recommend the existing agreement with Netflix, which would see Netflix acquire WBD’s studio and streaming business for $72 billion in cash, potentially rising to $83 billion including debt. Paramount argues its offer is superior, pointing to a potential sliding scale payout in the Netflix deal ranging from $21.23 to $27.75 per share.
Regulatory Scrutiny and Potential Outcomes
The proposed acquisitions have drawn scrutiny from regulators worldwide, with the U.S. Department of Justice initiating reviews of both deals. Paramount has secured clearance from German authorities. Both Paramount and Netflix have been in contact with the DOJ regarding requests for additional information.
The companies involved maintain that the mergers would benefit consumers by increasing content options. However, unions and trade groups have expressed concerns about potential job losses and reduced content diversity.
Frequently Asked Questions
What is Paramount offering for Warner Bros. Discovery?
Paramount is offering $30 per share in cash for Warner Bros. Discovery shares, and will also pay a “ticking fee” of 25 cents per share per quarter if the deal isn’t completed by the end of the year. They have also pledged to cover Warner’s $2.8 billion breakup fee to Netflix.
What is Netflix’s offer for Warner Bros. Discovery?
Netflix has agreed to an all-cash transaction to buy Warner’s studio and streaming business for $72 billion, with an enterprise value of about $83 billion, or $27.75 per share.
What is the current status of Paramount’s bid?
Paramount has extended the deadline for its tender offer to March 2, and is soliciting proxies to challenge Warner’s agreement with Netflix. As of Monday, more than 42.3 million Warner shares had been tendered, down from over 168.5 million shares on January 21.
As the situation continues to evolve, will Warner Bros. Discovery shareholders ultimately favor the cash offer from Paramount, or the proposed merger with Netflix?
