Paramount on Tuesday evening said it “welcomed” the determination of the Warner Bros. Discovery board that its latest offer could potentially prove a winner and provided a bit more detail on the sweetened terms.
WBD’s board of directors announced earlier in the day that Paramount’s revised $31-per-share, all-cash offer to acquire WBD could reasonably be expected to lead to what’s called a “Company Superior Proposal” under the terms of WBD’s merger agreement with Netflix. That means WBD can and will extend its talks with the David Ellison company that ran initially for seven days through Monday.
“Paramount welcomes WBD Board’s determination and looks forward to continuing to engage constructively with WBD to deliver the benefits of Paramount’s proposal to WBD shareholders, the creative community and consumers,” Par said.
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Under the terms of its revised offer, Paramount has done the following:
— Increased the purchase price to $31 per WBD share in cash for 100% of the company – up from $30.
— Accelerated timing of the daily “ticking fee” of $0.25 per quarter to commence after September 30, 2026, until the consummation of the Paramount transaction.
— Increased the regulatory termination fee to $7 billion in the event the transaction does not close due to regulatory matters.
— Agreed to an obligation to contribute additional equity funding to the extent needed to support the solvency certificate required by PSKY’s lending banks, and
— Agreed to a “Company Material Adverse Effect” definition that excludes the performance of WBD’s Global Linear Networks business (closing a loophole that could have allowed it to bail if the cable business tanked).
— Reaffirmed it will pay the $2.8 billion termination fee which WBD would be required to pay to Netflix to terminate its existing Netflix merger agreement.
— Reaffirmed it will eliminate WBD’s potential $1.5 billion financing cost associated with its debt exchange offer.
WBD said earlier that, while it is in talks with Paramount, the Netflix agreement remains in force and it continues to recommend shareholders in favor of the streamer deal, which is for $27.75 a share for Warner’s studios and streaming business.
WBD has a fiduciary duty to examine all proposals but has shot down all of Paramount’s previous offers outright until this last one.
Switching deal partners would require a few steps. WBD’s board must first determine that Paramount’s revised proposal is superior. When or if it does, Netflix will have four business days to match. If the streamer does not, the Netflix merger agreement could be terminated and a definitive merger agreement executed between Paramount and WBD.