Paramount has revised its bid for Warner Bros. Discovery (WBD), introducing a significant $40.4 billion guarantee from billionaire Larry Ellison while maintaining its initial offer of $30 per share. The update comes as WBD's board has expressed support for Netflix's competing proposal, which values WBD's studios and streaming business at $27.75 per share but excludes the company's cable channels, such as CNN.
The new bid addresses concerns raised by the WBD board regarding the trust backing the original offer. In its response, Paramount emphasized that Ellison's personal guarantee would not be subject to revocation, countering previous criticisms of the bid's financial underpinnings. Additionally, Paramount increased its termination fee from $5 billion to $5.8 billion, aligning it with Netflix's offer.
David Ellison, Paramount's CEO and Larry Ellison's son, reiterated the company's commitment to acquiring WBD, asserting that their all-cash offer remains superior in maximizing shareholder value. Analysts from Raymond James suggest that, despite Paramount's efforts, WBD is likely to favor Netflix's bid. The analysts predict that Paramount may need to raise its offer to the mid-$30 range to remain competitive.
In response to the news, Paramount's stock rose by over 5%, while WBD's shares increased by approximately 3%. Netflix's stock experienced a slight decline of less than 1%. The ongoing bidding war has drawn considerable attention, with significant implications for the future of major entertainment entities. WBD's board chair has indicated that a shareholder vote regarding the offer is not expected until at least the spring, suggesting a prolonged negotiation process ahead.