Warner Bros Discovery (WBD) has set March 20 as the date when shareholders will meet to vote on the proposed merger with Netflix.
Netflix has provided WBD with a limited waiver, permitting WBD to engage in discussions with Paramount Skydance for a seven-day period ending on February 23, to seek clarity for WBD stockholders and provide Paramount the opportunity to make its best and final offer.
A statement from WBD confirms that its board “continues to unanimously recommend in favour of the Netflix merger” and “unanimously recommends that shareholders reject” Paramount’s offer.
A senior representative for Paramount informed a WBD board member that, if the WBD board authorised discussions, Paramount would agree to pay $31 per share – up from $30 per share – and that the offer was not Paramount’s “best and final” proposal.
In a letter and revised merger agreement sent to members of the Paramount board, WBD’s board of directors reiterated concerns around the “significant debt financing” involved in Paramount’s offer and a need for ”absolute clarity as to funding obligations and certainty of funding at closing, or to pay damages if due”.
“Throughout the entire process, our sole focus has been on maximising value and certainty for WBD shareholders,” said David Zaslav, president and chief executive officer of WBD.
On February 10, Paramount attempted to sweeten its offer for WBD by adding a ‘ticking fee’ and offering to cover the $2.8bn that WBD would need to pay to get out of its agreement with rival bidder Netflix.
“Every step of the way, we have provided PSKY [Paramount Skydance] with clear direction on the deficiencies in their offers and opportunities to address them. We are engaging with PSKY now to determine whether they can deliver an actionable, binding proposal that provides superior value and certainty for WBD shareholders through their best and final offer.”
Samuel A. Di Piazza, Jr, chair of the WBD board of directors, added: “As announced today, we continue to believe the Netflix merger is in the best interests of WBD shareholders due to the tremendous value it provides, our clear path to achieve regulatory approval and the transaction’s protections for shareholders against downside risk.
“With Netflix, we will create a brighter future for the entertainment industry – providing consumers with more choice, creating and protecting jobs and expanding US production capacity while increasing investments to drive the long-term growth of our industry.”
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