Further developments have taken place in the potential acquisition of Warner Bros. Discovery by either Netflix or Paramount, which has drawn concern from lawmakers on both sides of the aisle as well as cinema industry trade groups.
In a press release, Warner Bros. Discovery (WBD) announced a special meeting of shareholders on Friday, March 20. At that meeting, shareholders will vote on the proposed merger with Netflix. The streaming giant has provided a limited waiver under the terms of their merger agreement that allows Warner Bros. Discovery to engage in discussions with Paramount Skydance (PSKY) for a seven-day period ending on February 23; during this period, per WBD, shareholders will use the time to “provide PSKY the ability to make its best and final offer” and “engage with PSKY to discuss the deficiencies that remain unresolved and clarify certain terms of PSKY’s proposed merger agreement.” WBD’s Board of Directors has unanimously recommended that shareholders vote for the Netflix merger and reject the terms set forth by PSKY. Per WBD, this comes following a senior PSKY representative informing a WBD Board Member that the $31 per share price previously discussed was not, in fact, PSKY’s “best and final” proposal.
“Throughout the entire process, our sole focus has been on maximizing value and certainty for WBD shareholders,” said David Zaslav, president and chief executive officer of Warner Bros. Discovery. “Every step of the way, we have provided PSKY with clear direction on the deficiencies in their offers and opportunities to address them. We are engaging with PSKY now to determine whether they can deliver an actionable, binding proposal that provides superior value and certainty for WBD shareholders through their best and final offer.”
Samuel A. Di Piazza, Jr., chair of the Warner Bros. Discovery Board of Directors added, “As announced today, we continue to believe the Netflix merger is in the best interests of WBD shareholders due to the tremendous value it provides, our clear path to achieve regulatory approval and the transaction’s protections for shareholders against downside risk. With Netflix, we will create a brighter future for the entertainment industry—providing consumers with more choice, creating and protecting jobs and expanding U.S. production capacity while increasing investments to drive the long-term growth of our industry.”
In a letter to members of the Paramount Skydance Board, Di Piazza and Zaslav, speaking on the behalf of the WBD Board of Directors, say that “Our agreed transaction with Netflix offers superior value for our shareholders, allows us to achieve our strategic goal to separate WBD’s businesses, offers a high degree of certainty with minimal risk to the businesses in the interim and has essentially no financing risk.” The letter then refers to an amended tender offer for WBD common stock made by Paramount Skydance on February 10, noting that while the amendment “addresses some of the concerns that WBD had identified several months ago, it still contains many of the unfavorable terms and conditions that were in” prior draft agreements, both rejected unanimously by the WBD Board.
The letter concludes with assurances that, during the seven-day period when PSKY will be invited to clarify its best and final offer, “we welcome the opportunity to engage with you and expeditiously determine whether PSKY can deliver an actionable, binding proposal that provides superior value, transaction certainty and interim protection for WBD’s businesses to Warner Bros. Discovery shareholders.”
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