Warner Bros shareholders have overwhelmingly approved of the company’s proposed merger with Paramount Skydance in a preliminary vote. This brings the sale process one step closer to the finish line.
The deal would be worth around US$11 billion (A$15.38 billion), with Paramount offering $31 per share for the entirety of Warner Bros. Discovery.
This offer caused Netflix to walk away from its deal with Warner Bros after a months-long bidding war between the companies.
Paramount’s deal would also include a $7 billion breakup fee in the event the proposed merger didn’t win regulatory approval.
The company also agreed to pay the $2.8 billion Warner Bros owed Netflix for the termination of that agreement.
Warner Bros CEO and president David Zaslav said the shareholder approval was a key milestone towards completing the transaction.
“We will continue to work with Paramount to complete the remaining steps in this process that will create a leading, next-generation media and entertainment company,” he said.
Top proxy advisory firm Institutional Shareholder Services (ISS) had recommended that shareholders accept the deal, which it said was “the result of a competitive sales process and public bidding war.”
“Further, shareholders are receiving a meaningful premium to the unaffected share price, there is a potential downside risk of non-approval, and the cash consideration provides liquidity and certainty of value to shareholders,” ISS wrote in its report.
“Given these factors, support for the proposed transaction is warranted.”
Despite the vote leaning towards the deal, shareholders voted against compensation packages for Zaslav and WBD’s other named executive officers in connection with the Paramount merger.
The ISS also advised against the WBD executive packages.
Under the terms of the exit compensation package for Zaslav, he will receive $34.2 million in cash severance; $517.2 million in equity in the combined company; and $44,195 in continued health coverage reimbursement benefits, according to a WBD filing with the SEC. That’s at least $550 million. In addition, Warner Bros. Discovery has agreed to reimburse Zaslav up to $335 million for taxes assessed by the IRS on his accelerated stock vesting.
Zaslav had $115.85 million worth of vested stock from Warner Bros as of 11 March, according to the filing and last month he sold $114 million of WBD stock.
The vote comes as a slew of Hollywood actors have signed an open letter opposing the acquisition.
Warner Bros (NASDAQ: WBD) shares finished down 1.57% to $26.90. Its market cap is $67.43 billion.
Paramount Skydance (NASDAQ: PSKY) shares were down 4.49% to $11.27. Its market cap is $12.53 billion.
