In a positive development for Paramount, the Warner Bros Discovery (WBD) board said on Tuesday afternoon that the latest revised offer from David Ellison’s studio could turn out to be superior to the Netflix bid.
Paramount and WBD continue to engage after a week-long negotiating window that has brought a revised proposal from Paramount of $31 per share in cash. Paramount said on Tuesday evening that it welcomed the board’s determination and provided further details on its latest bid.
The WBD board said Paramount’s revised offer “could reasonably be expected to lead to a ’Company Superior Proposal’ as defined in WBD’s merger agreement with Netflix”.
The board continues to recommend Netflix’s proposal to shareholders, who will meet on March 20 to vote on the matter. However Tuesday’s development has changed the game and Netflix will be on high alert after a busy press tour in which co-CEO Ted Sarandos has repeatedly expressed confidence in his company’s bid.
Screen understands ongoing talks between WBD and Paramount are open-ended. If the board were to determine that Paramount’s new offer is superior to that of Netflix, the streamer would have four business days to negotiate with WBD and submit revisions to its proposal.
Netflix does not have to wait for that window to start and could submit a revised offer sooner. The company declined to comment when approached by Screen.
Paramount’s revised offer for the entirety of WBD run by CEO David Zaslav includes a “ticking fee” equal to 25 cents per quarter that kicks in after September 30 until the transaction closes; a $7bn “regulatory termination fee” that Paramount would pay should the transaction not close due to regulatory matters; and paying the $2.8bn termination fee that WBD would owe to Netflix should it terminate the existing agreement.
Paramount also reaffirmed it will eliminate WBD’s potential $1.5bn financing cost associated with its debt exchange offer; agreed to an obligation to contribute additional equity funding needed to support the solvency certificate required by Paramount’s lenders; and agreed to a “Company Material Adverse Effect” definition that excludes the performance of WBD’s cable TV business.
As previously announced, the waiting period under the Hart-Scott-Rodino Antitrust Improvements Act applicable to Paramount’s acquisition of WBD expired on February 19.
The Netflix deal for Warner Bros’ streaming and studios business is valued at $82.7bn, while Paramount’s most recent offer for the entire WBD has been valued at $108.4bn.
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