Warner Bros. Repeatedly Rejects Paramount Acquisition Proposal... Sticks to Netflix Merger

The board of Warner Bros. Discovery (hereinafter referred to as Warner Bros.) has once again rejected the revised acquisition proposal from Paramount SkyDance (hereinafter referred to as Paramount), according to major U.S. media reports on the 7th (local time).

⬦ "Acquisitions funded by debt are risky"... 'NO' to Paramount's LBO method

According to Bloomberg and CNBC, the Warner Bros. board unanimously rejected Paramount's stock purchase proposal in an official letter sent to shareholders on the same day and recommended maintaining the existing deal with Netflix.

The board reaffirmed its judgment that Paramount's latest proposal is "inferior" to the $72 billion ($27.75 per share) deal with Netflix.

In particular, it pointed out that the need for over $50 billion in debt financing for Paramount's acquisition is a key concern. The board stated, "The feasibility of the largest leveraged buyout (LBO) in history is uncertain," adding, "Compared to the certainty of the Netflix merger proposal, Paramount's offer increases the risk of deal failure due to the massive debt size and other conditions."

The board also added, "Changes in Paramount's financial condition or fluctuations in the industry and financial environment could jeopardize this financing plan."

Earlier, the Warner Bros. board selected Netflix as the final target in a competitive bidding process for its acquisition in early last month. In response, Paramount declared a hostile merger and began a public stock purchase at $30 per share in cash.

In response to Warner Bros.'s initial rejection, Paramount submitted a revised proposal stating that Larry Ellison, the chairman of Oracle and father of CEO David Ellison, would provide $40.4 billion in personal guarantees as part of the acquisition funding; however, it is analyzed that the decision of the board was influenced by not raising the acquisition price.

⬦ Netflix "Welcomes Wise Decision"... Now Only 'Monopoly Review' Remains

Meanwhile, Netflix expressed its position welcoming the decision of the Warner Bros. board in a statement on the same day. Netflix emphasized, "After a comprehensive and rigorous review process with independent financial and legal advisors, the Warner Bros. board reaffirmed that the deal with Netflix is in the best interest of shareholders."

Additionally, Netflix stated that it has submitted the merger notification to the relevant authorities and is in discussions with antitrust authorities, including the U.S. Department of Justice and the European Commission.