Warner Bros Discovery has once again rejected a hostile takeover offer from Paramount Skydance.
The WBD board said it believed the Paramount offer was inferior to Netflix’s offer to buy WBD’s studio and streaming business for US$72 billion, which it accepted last year.
“We have a signed merger agreement with Netflix, it’s a compelling value, a clear path to closing and protections for our shareholders if something stops the close, whatever that might be,” WBD board Chairman Samuel Di Piazza told CNBC’s David Faber on “Squawk Box”.
Paramount launched its hostile bid for WBD just days after WBD accepted Netflix’s deal.
The Paramount deal offered to purchase the media conglomerate for US$30 per share in cash or US$108.4 billion in total.
Other than the price, a key difference between the two deals was that Netflix would only buy Warner Bros movie studios and HBO streaming service, while Paramount was also seeking to purchase WBD in its entirety.
This would include Warner Bros’ pay-TV channels, including CNN and TNT.
After being rejected for the first time, Paramount doubled down by guaranteeing the backing of billionaire Larry Ellison, the father of Paramount Skydance CEO David Ellison.
Despite this, Paramount stopped short of upping the amount of its big.
In a letter to shareholders, the WBD board said Paramount failed to submit the best proposal for WBD shareholders.
"Paramount's offer continues to provide insufficient value, including terms such as an extraordinary amount of debt financing that create risks to close and lack of protections for our shareholders if a transaction is not completed,” Di Piazza said.
“Our binding agreement with Netflix will offer superior value at greater levels of certainty, without the significant risks and costs Paramount's offer would impose on our shareholders."
Netflix also made a statement welcoming WBD’s most recent decision.
“Netflix and Warner Bros. will bring together highly complementary strengths and a shared passion for storytelling,” Netflix co-CEOs Ted Sarandos and Greg Peters said.
“By joining forces, we will offer audiences even more of the series and films they love - at home and in theatres - expand opportunities for creators, and help foster a dynamic, competitive, and thriving entertainment industry.”
Netflix will acquire Warner Bros., including its film and television studios, HBO Max and HBO, in a cash-and-stock transaction valued at $27.75 per WBD share.
