Paramount hostile Warner bid adds breakup fee cover and ticking fee but holds $30 price, as Warner reviews Netflix deal
Paramount Skydance Corp., led by chief executive David Ellison, on Tuesday intensified its Paramount hostile Warner bid by unveiling fresh financial concessions aimed at persuading Warner Bros. Discovery Inc. shareholders to reconsider the company’s pending agreement with Netflix Inc.
Also read: Netflix faces investor scrutiny over $83bn Warner Bros bid
The revised proposal includes Paramount’s commitment to assume responsibility for the 2.8 billion dollar termination fee Warner Bros.
would owe Netflix if it withdraws from its existing deal.
The concession addresses one of the most significant financial barriers to abandoning the Netflix transaction.
Paramount also pledged to backstop Warner Bros.’
planned debt refinancing and absorb up to 1.5 billion dollars in associated costs if necessary.
The move is designed to ease concerns that a merger could leave the combined entity burdened by heavy leverage.
In a further incentive, Paramount introduced a ticking fee of 25 cents per share for each quarter the deal remains unclosed beyond 31 December.
The mechanism is intended to compensate shareholders for potential regulatory delays and to signal confidence in securing government clearance.
Despite the added sweeteners, Paramount maintained its original 30 dollars per share all cash offer.
The company did not materially alter the leverage structure implied by the merger, a central sticking point for Warner Bros.’ leadership.
Warner Bros. said it would review the amended tender offer and issue a recommendation to shareholders in due course.
The company has previously rejected multiple approaches from Paramount and is proceeding with plans to put the Netflix agreement, valued at 27.75 dollars per share or about 82.7 billion dollars, to a shareholder vote by April.
Analysts remain cautious about the proposal’s prospects.
Bloomberg Intelligence analysts Geetha Ranganathan and Raveeno Douglas said the incremental commitments equate to roughly 1.79 dollars per share in added value tied to termination and financing costs.
However, the analysts suggested Warner Bros.’ board may not engage unless the base bid rises to at least 32 dollars per share.
Markets reacted positively to the renewed contest.
Shares in Paramount and Warner Bros. rose about 1.7 per cent after the announcement, while Netflix gained 3.5 per cent, reflecting investor expectations that a higher offer could yet emerge.
Paramount’s pursuit has been under way for months.
The Ellison family and partners have committed 43.6 billion dollars in equity financing and lined up an additional 54 billion dollars in debt from Bank of America Corp., Citigroup Inc., and Apollo Global Management, underscoring the bold scale of the effort.
Regulatory positioning has become a strategic pillar of the campaign. Paramount disclosed compliance with a second request for information from the United States Justice Department, triggering a 10 day review window.
Clearance without objection would strengthen Paramount’s case that its offer faces fewer antitrust obstacles than the Netflix transaction.
For now, the Paramount hostile Warner bid has raised the stakes without raising the price.
Also read: Netflix earnings beat fails to calm Warner deal fears
Whether the latest incentives will be decisive remains uncertain, but pressure on Warner Bros.’ board has unmistakably intensified.
Mariam Balogun is a contributor to Freelanews.com, covering news, business, and public affairs.
