Warner Opens Door to Paramount in $31 Bid War

Warner Bros. Discovery (WBD) has reopened discussions with Paramount Global after the company, backed by Skydance, raised its takeover offer to $31 per share in cash. The move has intensified the bidding war for the Hollywood studio behind major franchises like Batman and Harry Potter.

The board of Warner Bros. Discovery confirmed that it will further engage with Paramount to review the revised proposal. However, it has not yet determined whether Paramount’s new offer is superior to the existing merger agreement with Netflix.

Details of Paramount’s Revised Offer

Paramount increased its offer to $31 per share in cash for the entire company. To make the proposal more attractive, it also:

• Raised the termination fee to $7 billion, up from $5.8 billion, if the deal fails to receive regulatory approval.

• Agreed to pay Warner shareholders 25 cents per share per quarter for every quarter beyond September 30 if the deal does not close.

• Promised to add more equity funding if banks raise concerns about financing the transaction.

Paramount said it looks forward to constructive discussions to deliver benefits to shareholders, the creative community, and consumers.

Netflix’s Competing Proposal

Netflix has offered $27.75 per share in cash, valuing the deal at $82.7 billion including net debt. However, Netflix’s bid is only for Warner’s movie and television studios, content catalog, and HBO Max streaming service.

Warner plans to spin off its television division into a separately traded company called Discovery Global. The final value of Netflix’s proposal depends partly on the future debt level and market value of Discovery Global once it begins trading.

Warner’s board estimates Discovery Global could be worth between $1.33 and $6.86 per share. This could potentially raise total shareholder returns beyond Paramount’s earlier $30 offer.

Under the agreement terms, if a superior proposal emerges, Netflix has four business days to revise its offer. Netflix declined to comment on the latest developments.

Market and Investor Reactions

The bidding war has created uncertainty in the market. Shares of both Netflix and Paramount have fallen since the takeover battle began. Analysts say it remains unclear whether further bid increases would be driven by business strategy or competitive pressure.

Analysts also warn that shareholder lawsuits could follow if Netflix ultimately wins, as the two bids involve different assets and are not directly comparable.

Activist investor Ancora Holdings has criticized Warner’s board, saying it did not properly engage with Paramount. Meanwhile, Paramount had earlier indicated it might launch a board challenge at Warner’s annual meeting if its bid is rejected.

Warner Bros. Discovery will publish its quarterly earnings this week, which may provide clearer insight into the value of its cable television assets. Paramount is set to report its results on Wednesday.

Warner has scheduled a shareholder vote on the Netflix deal for March 20. The final decision could reshape the Hollywood industry by handing control of one of its most valuable studios and content libraries to either Netflix or Paramount.