Paramount Skydance on Monday escalated takeover fight for Warner Bros Discovery by filing a lawsuit demanding more transparency over the media giant’s proposed $82.7 billion deal with Netflix. The legal action represents one of Paramount’s gravest moves to date in its bid to acquire control of one of Hollywood’s most iconic studios.
Led by David Ellison, Paramount said that it also would seek to put its own slate of directors to the Warner Bros board, trying to convince shareholders that its $108.7 billion all-cash offer is a better deal than Netflix’s cash-and-stock offer. Paramount is offering $30 per share for the entire Warner Bros group compared against Netflix’s $27.75 per share bid centred around the company’s studios and streaming assets.
The contest has become a battle to the death between Paramount and Netflix for Warner Bros enormous movie and television business and prized content library, which includes the “Harry Potter” franchise and DC Comics. Warner Bros last week rejected Paramount’s latest offer and urged shareholders to back the Netflix transaction instead.
In a letter to investors, Paramount said that it would propose changes to Warner Bros bylaws that would require shareholder approval for any separation of Warner Bros cable television business, one of the key components of the Netflix deal. Paramount says that its all-cash bid would be simpler, more valuable and likelier to pass regulatory scrutiny.
Paramount also reiterated its claim that basically the cable spinoff envisioned under the Netflix agreement is effectively worthless. Despite repeated rejections, however, Paramount has not increased its offer price, one point stressed by critics. Analyst Craig Huber said the lawsuit was unlikely to be decisive and that “money talks” if Paramount really wants the asset.
Warner Bros has said walking away from Netflix deal would trigger $2.8 billion termination fee, which contributes to around $4.7 billion in exit costs. Paramount’s revised proposal involves $40 billion in equity personally guaranteed by Oracle co-founder Larry Ellison and $54 billion of debt financing.
Warner Bros rejected the lawsuit as “meritless,” arguing that Paramount had failed to rectify obvious problem areas in its offer. Paramount filed the suit with the Delaware Court of Chancery seeking disclosure of the financial analysis behind the board’s support of Netflix arguing the information is necessary for shareholders before Paramount’s offer expires January 21.
Also read: Netflix to buy Warner Bros. Discovery in massive $83 Billion deal
