Paramount Boosts Bid for Warner Bros. Discovery Acquisition

Paramount Pictures has recently amplified its bid for Warner Bros. Discovery (WBD), introducing a new strategy aimed at shareholders. While the initial offer of $30 per share remains unchanged, Paramount has added a $0.25 per share “ticking fee.” This fee will be paid to WBD shareholders for each quarter that the deal has not closed beyond December 31, 2026. The adjustment reflects Paramount’s belief in a swift approval process by regulatory authorities.

Details of Paramount’s Enhanced Offer

The newly proposed ticking fee equates to approximately $650 million in cash value each quarter. Furthermore, Paramount has committed to cover a substantial $2.8 billion termination fee payable to Netflix. This addition of financial support aims to alleviate WBD’s debt financing issues.

Current Acquisition Climate

• WBD is currently involved in a deal to sell studios and streaming assets to Netflix.
• Paramount has urged WBD shareholders to reject Netflix’s ongoing acquisition attempts.
• The ongoing competition has prompted a public relations conflict amongst all parties involved.

Netflix had previously upgraded its offer to $27.75 per share, switching from a cash-and-stock proposal to an all-cash deal. In the backdrop of this acquisition battle, WBD is working to schedule a special meeting in April for shareholders to vote on the Netflix transaction, encouraging a favorable response.

Strategic Moves by Paramount

Paramount is not only lobbying WBD shareholders to reject the Netflix deal but is also seeking to acquire WBD’s assets directly. The Ellison family is preparing to present an alternative slate of directors at WBD’s upcoming annual meeting.

• Paramount’s offer avoids acquiring WBD’s cable assets.
• Paramount’s plans include spinning off linear television into a separate entity named Discovery Global.

In terms of financial commitments, Paramount’s approach includes providing WBD with substantial flexibility regarding its $15 billion bridge loan. The company assures that financing sources are ready to extend this loan’s maturity as needed, while also supporting any potential debt structure WBD opts for.

Financial Backing and Future Engagement

The latest offer for WBD is underpinned by $43.6 billion of equity commitments from the Ellison family and RedBird Capital Partners, along with $54 billion in debt commitments from major financial institutions, including Bank of America and Citigroup. Larry Ellison, the co-founder of Oracle, has made an irrevocable personal guarantee encompassing equity financing.

David Ellison has emphasized the potential for collaboration to finalize the details of the deal, noting that the WBD board has been reluctant to engage in discussions regarding Paramount’s various proposals. Paramount’s continued efforts underline the uncertainty facing WBD amid competing offers and the evolving landscape of the entertainment industry.