Netflix is considering amending its deal for Warner Bros. Discovery’s studio and streaming assets to be all-cash as it looks to expedite its closing and fend off Paramount CEO David Ellison’s $108.4 billion hostile takeover bid, according to Bloomberg.
Under the current $82.7 billion deal, Warner Bros. shareholders are set to receive $23.25 in cash and $4.50 in Netflix stock, subject to a collar based on the stock’s 15-day volume weighted average price.
If Netflix stock falls below $97.91 per share, WBD shareholders would receive 0.0460 Netflix shares for each WBD share they own. Netflix closed at $90.32 per share on Wednesday after trading as low as $89.07 apiece.
Netflix and Warner Bros. Discovery declined to comment.
On Monday, Paramount CEO David Ellison sued in the Delaware Court of Chancery, seeking to extract more information about how Warner Bros. Discovery’s board came to the conclusion that Netflix’s deal was superior to its tender offer.
It also threatened to launch a proxy battle, in which it would attempt to install a new board of directors at Warner Bros. Discovery’s 2026 annual meeting in order to get the company to engage further with its offer and propose amending the company’s bylaws to require shareholder approval of its separation of Discovery Global slated for the third quarter of 2026.
A threshold of just 20% of WBD shareholders who have held the stock for at least a year are needed in order to call a special meeting before then.
Paramount has submitted a total of eight bids for all of Warner Bros. Discovery, including an amended offer that included a “irrevocable personal guarantee” from David’s father, Oracle co-founder and the world’s fourth richest man Larry Ellison.
But Warner Bros.’ board has continued to reject the Ellisons, arguing that its bid offers “insufficient value” and “significant costs, risks and uncertainties.” It also said the bid is “inadequate” and “inferior” when compared to Netflix and that there’s a “lack of certainty” in Paramount’s ability to complete the offer.
“Despite six weeks and just as many press releases from Paramount Skydance, it has yet to raise the price or address the numerous and obvious deficiencies of its offer. Instead, Paramount Skydance is seeking to distract with a meritless lawsuit and attacks on a board that has delivered an unprecedented amount of shareholder value,” A Warner Bros. Discovery spokesperson told TheWrap on Monday. “In spite of its multiple opportunities, Paramount Skydance continues to propose a transaction that our board unanimously concluded is not superior to the merger agreement with Netflix.”
Despite the board’s recommendation against Paramount’s tender offer, some shareholders have signaled support for the Ellisons.
Warner’s seventh largest shareholder Pentwater Capital Management has said that Paramount’s revised bid is “economically superior” and penned a letter to the board accusing them of breaching their fiduciary duty by not appropriately engaging with Ellison on his latest bid.
On Monday, GAMCO Investors chairman Mario Gabellit old TheWrap he believes that Paramount’s bid is “superior” and urged Netflix to simplify the structure of its deal. He also reiterated that he plans to tender the majority of his clients’ shares to Paramount Skydance, but pointed out that he has the right to withdraw those shares at anytime before the offer’s expiration.
Meanwhile, Warner’s fifth largest shareholder Harris Associates believes that Paramount’s revised $108.4 billion bid is “not sufficient” and has called for the media company to raise the offer. Despite claiming that the $30 per share bid is not “best and final,” Ellison has held off on raising his bid.
Paramount’s tender offer is currently set to expire on Jan. 21 at 5 p.m. ET, barring no extension. As of Dec. 19, less than 400,000 shares had been validly tendered and not withdrawn.
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