Paramount continues to put up a fight over the pending sale of Warner Bros. to Netflix. On Wednesday, the company announced it was suing Warner Bros. in a continuation of its attempt at a hostile takeover of the company.
The lawsuit comes just days after Paramount’s latest bid was rejected, again, by Warner Bros. Discover.
According to the lawsuit, Paramount claims that the Warner Bros. Discovery board misled shareholders and concealed financial analysis. In a letter to Warner Bros. Discovery shareholders announcing the suit, Paramount CEO David Ellison said that the company has “failed to include any disclosure about how it valued the Global Networks stub equity, how it valued the overall Netflix transaction, how the purchase price reduction for debt works in the Netflix transaction, or even what the basis is for its “risk adjustment” of our $30 per share all-cash offer.”
He continued, saying that shareholders need that information to “make an informed investment decision on our offer.”
Why Paramount Is Fighting For Warner Bros?
On December 5, it was announced that Netflix and Warner Bros. Discover were in an agreement to sell the Warner Bros. side of the company to the streaming giant as part of an $82.7 billion deal. The sale would include only the company’s streaming and studios assets, including all of Warner Bros. Games.
Netflix’s offer of $27.75 per share doesn’t include the cable channels. Paramount’s offer of $30 would be for ethe entirety of the company. That would put the value of the cable networks at just $2.25 per share if the value of the streaming and studio assets remained the same as the Netflix deal.
Since the agreement was announced, Paramount has continued to try and force a sale to them. Leading up to and after the announcement of the Netflix deal, Warner Bros. Discovery has rejected at least eight Paramount offers.
The Warner Bros. Discovery board has said that Paramount would need to offer more cash and less debt for it to be reconsidered.
As far as why Paramount would want Warner Bros., it’s a pretty obvious. Video Games aside, which even Netflix called “minor” in terms of the deal, includes rights to a number of brands and IPs such as Harry Potter, Game of Thrones, DC, and more.
“Our objective from the moment we approached WBD was for a collaborative negotiation and a successful transaction that would be a win for both companies, both shareholder groups and all stakeholders,” Ellison wrote. “We remain perplexed that WBD never responded to our December 4th offer, never attempted to clarify or negotiate any of the terms in that proposal, nor traded markups of contracts with us.
“Even as we read WBD’s own narrative of its process, we are struck that there were few actual board meetings in the period leading up to the decision to accept an inferior transaction with Netflix. And we are surprised by the lack of transparency on WBD’s part regarding basic financial matters. It just doesn’t add up – much like the math on how WBD continues to favor taking less than our $30 per share all-cash offer for its shareholders.”
Both Netflix and Warner Bros. Discovery have declined to comment on the lawsuit.
What do you think of Paramount’s continued attempts to take over Warner Bros. Discovery by, seemingly, any means necessary? Leave your thoughts down below and join the official Insider Gaming Discord server.
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Mike has been covering the gaming industry since 2012, and has reported on some of the largest events in the industry while also working as an investigative reporter. Outside of…
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Now that I see the information about the cable part of the company not being included in the Netflix deal and is included for the Paramount… at just $2.25 more.
I really do not see why Paramount doesn’t understand that they would rather keep the cable aspect of the company at $2.25 a share.
Furthermore, WBD is probably annoyed at Paramount’s attempts to do a “hostile takeover” and the multiple offers in a such a short term.