Paramount sticks with $30-per-share bid as WBD backs Netflix deal
The WB water tower is seen at Warner Bros. Studios in Burbank
By Brian Stelter, CNN
(CNN) — Paramount is not raising its bid for Warner Bros. Discovery above $30 per share — at least not yet.
On Thursday, Paramount responded to WBD’s latest rejection letter by repeating its view that shareholders should support its hostile takeover bid.
“Paramount’s offer is superior to WBD’s existing agreement with Netflix and represents the best path forward for WBD shareholders,” the suitor said in a press release.
The two companies continue to go back and forth in a battle for control of HBO, Warner Bros. and other iconic media industry assets.
Wall Street analysts have speculated that Paramount will eventually surpass the $30 threshold to win support for its proposal to acquire all of WBD, including CNN.
But for now, WBD continues to say that its existing deal to sell Warner Bros. and HBO (but not CNN or other cable assets) to Netflix is in the shareholders’ best interests.
Paramount is urging WBD shareholders to reject their board’s advice and offload their shares to Paramount at the $30 level.
On Wednesday, WBD rebuffed Paramount’s latest offer, calling it “inadequate” and likening it to a risky leveraged buyout.
Paramount’s proposal “poses materially more risk for WBD and its shareholders,” including the possibility of the whole takeover plan falling apart, compared with the “certainty of the Netflix merger,” WBD said.
Paramount CEO David Ellison pushed back on Thursday, saying “our offer clearly provides WBD investors greater value and a more certain, expedited path to completion.”
The new Paramount statement argued that the current per-share value of the Netflix deal “is $27.421 — unmistakably inferior to Paramount’s $30.00 in cash.”
One big point of contention: The value of WBD’s cable assets, which Netflix is not acquiring. The cable channels, including CNN, are set to break off into a new, publicly traded company called Discovery Global later this year.
The Warner board has argued that Discovery Global will have significant value on its own. But Paramount has previously said it valued Discovery Global at just $1 per share.
Paramount’s new analysis on Thursday put a $0.00 per share value on the cable assets, citing — among other things — this week’s poor stock market performance for Versant, Comcast’s new spin-off of its cable channels, including MS NOW and CNBC.
Shares of Versant have declined about 30% since its Monday debut. A Versant executive told CNN that they expect the predictable selling to “shake out” and for the stock to settle in the coming weeks.
Paramount may still decide to raise its offer in the coming weeks.
Right now, “Netflix has the signed agreement. They have a regulatory script. This is theirs to lose,” said Reuben Miller, head of antitrust at Dealreporter.
However, he added, “I suspect Paramount will come back and, to borrow a famous phrase, ‘Make them an offer they can’t refuse.’”
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