Dec 17 (Reuters) – Warner Bros Discovery’s board rejected Paramount Skydance’s $108.4 billion hostile bid on Wednesday, saying it failed to provide adequate financing assurances.
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 “backstopped,” by the Ellison family, led by billionaire and Oracle co-founder Larry Ellison.
“It does not, and never has,” the board wrote of the guarantee of Paramount’s offer, noting that the offer posed “numerous, significant risks.
Here’s what analysts and market experts are saying about the latest development:
JEFFREY WLODARCZAK, CEO, PIVOTAL RESEARCH GROUP, NASHVILLE
“I think the WBD concerns over the PSKY offer are legitimate given NFLX offer is firm and backed by NFLX, a massive company with significant ability to add leverage. It appears the PSKY offer is not backed by Ellison family directly and can be withdrawn. On the other hand, the PSKY offer is likely to sail past regulators while NFLX offer is going to be heavily scrutinized. But NFLX can clear hurdles by modifying the deal such as agreeing to sell HBO with some short/medium-term content deals in place to someone like Comcast.”
“To get the deal done, PSKY is likely going to have to get rid of the revocable trust (Ellison family backstop), stop the hostile offer, adjust for NFLX break-up fee (higher offer) and a higher break-up fee. The problem for Ellison is that there is skepticism in the market from investors in Oracle’s data center strategy and that entity is already very highly leveraged.”
PAOLO PESCATORE, ANALYST, PP FORESIGHT, LONDON
“This is a strong endorsement of Netflix’s offer and its future ability to execute as a combined entity.”
“Furthermore, and more significantly, a better deal all round in terms of value and regulatory approval. It does feel like the path of least resistance.”
“This now leaves Paramount in a precarious position, in the shadows and a weaker player compared to its stronger rivals.”
“The ball is now firmly in Paramount Skydance’s court to significantly raise its offer. While this might still happen, it’s unclear whether the outcome will change given the concerns.”
JONATHAN KEES, SENIOR RESEARCH ANALYST, DAIWA CAPITAL MARKETS, NEW YORK
“It likely will become a media and proxy spectacle with each side presenting their case to shareholders, as well as to the press. I anticipate a lot of arguments and even accusations by each side to sway the public and shareholders. The fight should culminate at the next WBD shareholder meeting, which should be held early summer of 2026.”
“Around 73% of WBD is owned by institutions, with Vanguard, BlackRock, and State Street holding the largest positions. They tend to pay attention to what the shareholder advisory institutions recommend, though don’t necessarily follow them. The remainder of WBD are held by insiders and retail investors.”
“I think PSKY’s backing by the Ellison family is financially sufficient even if Jared Kushner’s firm pulls away.”
ROSS BENES, SENIOR ANALYST, EMARKETER, NEW YORK
“The saga is still far from over. WBD still has to go through shareholders and regulators to seal the Netflix deal. But this rejection shows that WBD’s board and executives strongly prefer Netflix as its suitor.”
(Reporting by Arnav Mishra and Anhata Rooprai in Bengaluru; Editing by Sriraj Kalluvila)
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