The Warner Bros. Discovery board is planning to reject Paramount’s amended all-cash hostile takeover bid when it meets next week, according to Lucas Shaw of Bloomberg. Though Paramount recently guaranteed funding from Oracle co-founder Larry Ellison, WBD has not publicly abandoned plans to go forward with the $27.75/share cash-and-stock deal for Netflix to acquire its streaming and studio assets.
The WBD board is said to be waiting on Paramount to increase financial terms for its offer, per Shaw. While Paramount has maintained its offer valuing WBD at $108.4 billion, it did increase its proposed reverse termination fee up $800 million to match with the $5.8 billion in the Netflix deal. Paramount also revised its offer to include “further improved flexibility to WBD on debt refinancing transactions, representations and interim operating covenants.”
The Paramount tender offer contains $54 billion of debt financing from Bank of America, Citi and Apollo in addition to the $40.7 billion in equity from the Ellison Trust and RedBird. Netflix’s deal contains $59 billion of debt financing from Wells Fargo, BNP Paribas and HSBC. The streaming provider recently entered a credit agreement for $25 billion in refinancing under an unsecured revolving credit facility ($5 billion) and two delayed draw term loans ($10 billion each).
Warner Bros. Discovery wrote in an SEC filing that a combined company with Paramount would be highly leveraged, predicting 6.8x 2026E EBITDA prior to synergies, which would equate to total pro forma debt “near $92 billion at closing.” Paramount believes it can reach $9 billion in synergies from the Paramount-Skydance merger plus the WBD offer, a figure that the WBD board said this month is both “ambitious” and “would make Hollywood weaker, not stronger.”
Should the Netflix deal be finalized, TNT Sports and other WBD global networks would remain spun out as Discovery Global, a transaction that is expected to be completed in Q3 2026. Paramount is arguing the stub is “generously” worth $1.40/share based upon the market value of Versant, the soon-to-be-launched spin company containing most NBCUniversal cable networks. Paramount believes the WBD global networks “will ultimately trade at a discount to Versant” because of its higher levels of debt.
Paramount chairman/CEO David Ellison has repeatedly said that its $30/share bid is “superior” to the Netflix bid, which he argued would lead to a protracted regulatory process. But because it opted for Netflix, WBD could not accept the Paramount bid as constructed without admitting a breach of its fiduciary duty, Ellison was reportedly overheard saying at an event this month.
It remains unknown if Paramount would choose to increase its bid for WBD any further, which initially began unsolicited this past September for $19/share. WBD would need to pay Netflix a $2.8 billion termination fee if it decides to embark on a different merger. Before it took an offer directly to shareholders, Paramount lawyers sent a letter accusing Warner Bros. Discovery of embarking “on a myopic process with a predetermined outcome that favors a single bidder.”
