As negotiations between Paramount and Warner Bros Discovery approach a critical deadline, the landscape of potential acquisitions is evolving rapidly. With the seven-day negotiation window between the two media giants nearing its closure tonight, reports have confirmed that Paramount has raised its bid from the previously established price of $30 per share.
This strategic move comes as Paramount intensifies its efforts to entice Warner away from its existing partnership with Netflix. While the specific details of the new bid remain unclear, this escalation follows a series of rejections from Warner regarding unsolicited offers from Paramount, all of which hovered around the $30 mark. Despite minor concessions, Warner has raised concerns primarily focused on financing guarantees, a critical component in what could become the largest leveraged buyout ever.
Insider sources suggest that a formal announcement is expected before the market opens on Tuesday, reflecting the urgency of both parties in finalizing the deal. Warner Bros Discovery indicated in a recent SEC filing that Paramount is prepared to exceed the previous bid of $30, with expectations that the new offer would reach at least $31. However, analysts surmise that to truly secure the deal, Paramount may need to consider a bid of $32 or higher, especially with Netflix holding the right to match any offer made to Warner Bros Discovery.
The backdrop of this unfolding drama is an intricate financial arrangement, with WBD’s recent deal to partner with Netflix valued at $82.7 billion. This agreement grants $27.75 per share in cash for Warner’s streaming and studio assets, alongside stock from WBD’s spinoff, Discovery Global. The actual value of this stock remains uncertain.
As the deadline looms, the situation is compounded by a Warner special meeting of shareholders on March 20, where they will vote on the Netflix deal and the accompanying cable spinoff initiative. Complicating matters further, Paramount has adopted a hostile approach by initiating a tender offer that directly targets WBD shareholders, bypassing the board altogether. This latest deadline for offers has been extended twice, underscoring the high stakes involved.
In the coming days, both companies are poised to report their fourth-quarter earnings, with Paramount’s announcement scheduled for Wednesday and WBD’s for Thursday. Industry analysts predict that these earnings calls will provide crucial insights into the companies’ financial health and future strategies, adding another layer of significance to the ongoing negotiations. As developments unfold, the outcome of these discussions could reshape the media landscape significantly.
