Paramount Skydance says it has cleared the Department of Justice’s Hart-Scott-Rodino (HSR) waiting period on its $108.4 billion hostile takeover bid — its first major antitrust hurdle in the United States.
The DOJ’s antitrust division began reviewing the $108.4 billion tender offer in December, with the waiting period previously scheduled to expire on Dec. 23 at 11:59 p.m. ET. However, the agency issued a second request for information, which extended the deadline until 10 calendar days after compliance with its request. Paramount said it complied with that request on Feb. 9, which means the 10-day waiting period expired on Feb. 19 at 11:59 p.m. ET.
Second requests typically ask for business documents and data that will inform the agency about the company’s products or services, market conditions where the company does business, and the likely competitive effects of the merger. The agency may conduct interviews, either informally or by sworn testimony, of company personnel or others with knowledge about the industry.
In a statement, Paramount claimed that the expiration of the HSR waiting period means there is “no statutory impediment in the U.S. to closing Paramount’s proposed acquisition of WBD.”
However, completion of the deal still requires Paramount to actually enter into a definitive agreement with Warner’s board, as well as receive shareholder approval and clearance from international regulators, including the European Commission.
The expiration of the HSR waiting period also does not stop the DOJ from investigating or challenging a signed deal between Warner Bros. and Paramount.
Approximately 42.3 million shares have been validly tendered to Paramount as of Feb. 9, though shareholders can withdraw their shares at any time before the tender offer’s Friday deadline.
Paramount said it “continues to engage constructively with antitrust enforcers and other regulators around the world.” It added that it received clearance from foreign investment authorities in Germany on Jan. 27, though that only addresses national security concerns and is one of more than a dozen foreign investment clearances needed. European regulators can still investigate the deal for potential antitrust concerns.
The latest development comes as Warner Bros. Discovery’s board agreed to reopen talks with Paramount for seven days, with the company asking for Ellison’s “best and final” offer by Feb. 23. However, it rejected the company’s latest amended $30 per share offer for the entire company and is still backing Netflix’s $83 billion, signed deal to acquire its streaming and studio assets.
WBD also said that a senior representative of Paramount informed the board that it would be willing to up its bid to $31 per share just to restart talks, an increase that it said is also not “best and final.”
Paramount said it is “prepared to engage in good faith and constructive discussions,” but noted that it still plans to proceed with its tender offer, as well as a proxy fight it launched to get shareholders to oppose the Netflix deal and require a vote to complete the Discovery Global spinoff. Paramount also plans to nominate its own director candidates to WBD’s board at the company’s annual meeting.
Netflix, which is offering $27.75 per share plus additional “stub equity” from the spinoff of Warner’s cable networks into Discovery Global, would have the option of countering any offer from Paramount.
In addition to its latest bid and the proxy fight, Ellison also sued Warner Bros. in January in an effort to extract more details about how the Netflix deal and Discovery Global spinoff were valued.
On Tuesday, Netflix knocked Paramount’s antics as an “ongoing distraction” and said that its $83 billion deal is “the only certain path to delivering value to WBD’s stockholders.”
It also expressed confidence that its own deal with Warner Bros. has a “clear path to timely regulatory approval.” It has already submitted its Hart-Scott-Rodino (HSR) filings and is engaging constructively with competition authorities across the world, including the U.S. Department of Justice (DOJ), state attorneys general, the European Commission, and the U.K. Competition and Markets Authority (CMA).
At the same time, Netflix argued that Paramount has “repeatedly mischaracterized the regulatory review process by suggesting its proposal will sail through, misleading WBD stockholders about the real risk of their regulatory challenges around the world.” For example, the company noted that it received clearance from foreign investment authorities in Germany on Jan. 27 — the same day as Paramount.
It also said that Paramount-Skydance’s bid is “already raising serious national security concerns” and that it expects the Committee on Foreign Investment in the United States (CFIUS), Team Telecom in the U.S. and European authorities to scrutinize its backing from Middle Eastern sovereign wealth funds.
Netflix has said that its deal would close within 12 to 18 months, pending regulatory approval. Meanwhile, Paramount has argued it would close a potential deal with Warner Bros. within a year. Warner Bros. shareholders will vote on the Netflix deal during a special meeting on March 20 at 8 a.m. ET.
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