A ruling from a Delaware Chancery Court judge has determined that Paramount has not demonstrated any “irreparable harm” as a Warner Bros. Discovery (WBD) shareholder that would warrant expedited disclosure amid its hostile tender offer for the media giant. Chancellor Morgant T. Zurn articulated this conclusion at the end of a court hearing, stating that Paramount has failed to identify any tangible harm stemming from the situation.
Following the ruling, Paramount released a statement clarifying that the decision was related to its standing as a shareholder and did not address the merits of its claims against WBD. Conversely, WBD asserted that Paramount’s lawsuit was an unserious distraction, noting that the judge recognized the lack of substance in Paramount’s case.
Paramount initiated this legal action to seek quicker access to disclosures from WBD regarding the board’s recommendation against tendering shares to Paramount. The urgency of the request was underscored by a January 21 deadline set by Paramount itself for shareholders to tender their shares, a move intended to challenge WBD’s merger agreement with Netflix.
While the tender deadline has been extended once, Paramount’s counsel acknowledged that it would be prolonged again, though no specific date was provided. Currently, the tender offer is not binding.
The central issue for Paramount involves obtaining detailed information about the valuation of the Discovery Global spinoff, which it claims is crucial for shareholders deciding between offers. In response, WBD stated that it would be releasing additional disclosures in its upcoming Netflix merger proxy statement and asserted that Paramount could not dictate the timeline for these disclosures.
Chancellor Zurn clarified the legal inquiry focused on whether Paramount, specifically in its capacity as a WBD shareholder, would face harm if disclosures were not expedited. He noted that Paramount had not been misled and had alternative means to obtain the necessary information, thereby placing the onus on Paramount to strategize its approach for success.
In its statement, Paramount emphasized the need for WBD shareholders to have insight into the board’s assessment of the Global Networks equity and the risk adjustments surrounding its offer, urging WBD to make these disclosures so that shareholders could make informed decisions. WBD, on the other hand, expressed satisfaction with the court’s agreement that the lawsuit did not warrant special consideration and hinted at potential serious flaws within it.
During the hearing, WBD attorney Ryan McLeod argued that Paramount was looking to the court for assistance in gaining control of WBD, despite having ample opportunity to participate in the lengthy sales process. He contended that Paramount’s concern was based solely on the fear that WBD shareholders might not tender their shares immediately for a deal that could take 18 months to finalize.
In response, Paramount attorney Michael Barlow stated that their objective was to swiftly provide shareholders with more information and insisted that Paramount remained committed to extending its tender offer.
Adding further complexity, Paramount plans to introduce an alternate slate of directors for a vote at WBD’s upcoming annual meeting, signaling a proxy fight. The window for initiating this process will open in about three weeks.
Paramount’s current offer stands at $30 per share in cash for all of WBD, while the Netflix deal encompasses a blend of cash and stock valued at approximately $27.75 per share. Meanwhile, Netflix is reportedly contemplating a shift to an all-cash offer.
