Netflix Deal Wins: Why Warner Discovery Turned Down $30 a Share
- Warner Bros. Discovery recommended shareholders reject Paramount's $77.9 billion offer, preferring a lower-valued but "safer" $72 billion deal with Netflix.
- Warner criticized the Ellison family's financing for the Paramount bid as "illusory," citing the use of a revocable trust with significant loopholes.
Warner Bros. Discovery has officially advised shareholders to reject Paramount’s unsolicited $77.9 billion hostile takeover bid, labeling the all cash offer as "illusory" and fraught with financial uncertainty. In a letter to investors, the board reaffirmed its commitment to a competing proposal from Netflix, which agreed to acquire Warner’s studio and HBO Max assets for $72 billion following a planned company split. Warner executives raised specific alarms regarding the financing behind Paramount’s bid, noting that the funding commitment from the Ellison family relies on a revocable trust containing "gaps, loopholes and limitations" that could leave the company and its shareholders at significant risk.
By contrast, Warner defended the Netflix agreement as the superior strategic path, citing the streaming giant's massive $400 billion market capitalization and investment grade balance sheet as proof of deal reliability. While Paramount argued its offer of $30 per share provided better immediate value than Netflix's $27.75 cash and stock proposal, Warner dismissed these claims and rejected the notion that the Netflix deal carried higher regulatory risks. The instability of Paramount’s backing was further highlighted by the sudden exit of Jared Kushner’s Affinity Partners from the investment group, casting further doubt on the hostile bid's viability even as Paramount signaled it might yet raise its price.