Paramount has extended the deadline for Warner Bros. Discovery shareholders to throw their support behind the company’s hostile takeover bid.
The initial deadline of Wednesday has now been pushed to February 20, the company said in an SEC filing. Paramount CEO David Ellison, along with his senior exec team and financial backers, have been meeting with WBD investors in recent weeks in order to persuade them to tender their shares in favor of Paramount’s offer.
Paramount has vowed to wage a proxy fight and launch an effort to elect a set of board members who endorse its bid. Thursday morning’s filing is the first step in that anticipated fight.
Days after Netflix and WBD announced an $82.7 billion deal last December for the streaming giant to acquire the studios-and-streaming division of Warner, Paramount went hostile. It went directly to WBD shareholders to ask them to consider its bod, which has an enterprise value of $108.4 billion, calling it superior to Netflix’s in many respects. Paramount and its allies continue to believe that their $30-a-share proposal has a better chance to get approved by regulators and that it offers more to shareholders given it is a takeover of the entire company.
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Netflix’s deal, by comparison, would leave shareholders with a “stub” in the form of Discovery Global, the division of WBD that controls a fading portfolio of linear TV networks. Paramount has assigned minimal value to the stub, but Netflix and the WBD board have said the components of Discovery Global, including CNN, have value in the open market. WBD is planning to proceed with a split of the company this spring.
A key question now is whether Paramount will raise its offer, and how Netflix would then respond. Netflix stock has sunk about 30% since the news of the deal emerged last fall, with many analysts worrying that the transaction is a defensive move and points toward a year or two of massive distractions for the dominant streamer.
As it continues the main chess game, Paramount has also sued WBD in Delaware Chancery Court, looking to compel it to release more information it says shareholders deserve to see. In a recent SEC filing, Paramount noted Thursday, WBD “revealed for the first time some of the critical information that had been withheld from its shareholders, but it still has omitted highly material information its shareholders need about Discovery Global.”
Hollywood has been on tenterhooks as the storied Warner assets, chief among them the film and TV studio and HBO, prepare to have their fourth new owner in a decade. The ultimate result of the takeover battle – whose plot has been additionally thickened by the comments and ties to the stakeholders of President Trump – will reshape the business forever and could cast a shadow over a major studio just a handful of years after Fox was swallowed up by Disney.
While the valuation of the rival Warner offers has not changed, the financial terms have been tweaked, with both now in all-cash. In response to the WBD board’s reservations, billionaire Oracle co-founder Larry Ellison also agreed to personally guarantee a large chunk of the Paramount offer.