LOS ANGELES – Paramount, a Skydance corporation, on Monday announced it has commenced an all-cash tender offer to acquire all of the outstanding shares of Warner Bros. Discovery Inc. for $30 per share in cash. 

Paramount’s hostile takeover transaction is for the entirety of WBD, including the Global Networks segment.

Its offer to WBD shareholders provides what it calls “a superior alternative” to the Netflix transaction to purchase the company, announced last week.

According to a news release from Paramount, the Netflix transaction offers “inferior and uncertain value and exposes WBD shareholders to a protracted multijurisdictional regulatory clearance process” with an uncertain outcome along with a complex and volatile mix of equity and cash.

The Paramount offer for the entirety of WBD provides shareholders $18 billion more in cash than the Netflix consideration. WBD’s board of directors’ recommendation of the Netflix transaction over Paramount’s offer “is based on an illusory prospective valuation of Global Networks that is unsupported by the business fundamentals and encumbered by high levels of financial leverage assigned to the entity,” according to the release.

“WBD shareholders deserve an opportunity to consider our superior all-cash offer for their shares in the entire company,” said David Ellison, chairman and CEO of Paramount. “Our public offer, which is on the same terms we provided to the Warner Bros. Discovery Board of Directors in private, provides superior value, and a more certain and quicker path to completion. We believe the WBD Board of Directors is pursuing an inferior proposal which exposes shareholders to a mix of cash and stock, an uncertain future trading value of the Global Networks linear cable business and a challenging regulatory approval process. We are taking our offer directly to shareholders to give them the opportunity to act in their own best interests and maximize the value of their shares.”

Here are some details of Paramount’s proposal:

  • Price: An all-cash offer at $30 per share, equating to an enterprise value of $108.4 billion, which represents a 139% premium to the undisturbed WBD stock price of $12.54 as of Sept. 10. In contrast, the Netflix proposal entails a volatile and complex structure valued at $27.75 mix of cash ($23.25) and stock ($4.50), subject to collar and the future performance of Netflix, equating to an enterprise value of $82.7 billion (excluding SpinCo).
  • Structure: Paramount proposal is for all of WBD, without leaving WBD shareholders with a sub-scale and highly leveraged stub in Global Networks, as the Netflix agreement assumes.
  • Timeline and regulatory certainty: Paramount is highly confident in achieving expeditious regulatory clearance for its proposed offer, as it enhances competition and is pro-consumer, while creating a strong champion for creative talent and consumer choice. 

Despite Paramount submitting six proposals over the course of 12 weeks, WBD never engaged meaningfully with these proposals, according to the release. Paramount has now taken its offer directly to WBD shareholders and its board of directors to ensure they have the opportunity to pursue this alternative.

“We believe our offer will create a stronger Hollywood. It is in the best interests of the creative community, consumers and the movie theater industry,” Ellison said. “We believe they will benefit from the enhanced competition, higher content spend and theatrical release output, and a greater number of movies in theaters as a result of our proposed transaction.”

The combination of Paramount and WBD would create a unique global media company and a transformative force as an entertainment leader, according to the release. It would create:

  • Scaled Hollywood champion: Paramount will invest to grow the creative engines at the heart of WBD and Paramount, maintaining the studios of both companies and focusing on attracting and retaining world-class creative talent to grow the scaled supply of high-quality content for its combined services and third-party distribution. This includes maintaining the current WBD theatrical slate with plans for additional growth.
  • A stronger supporter of movie theaters: Paramount strongly believes in the value of releasing feature movies in theaters and will continue to do so for the theatrical content of both Paramount and WBD studios.
  • Attractive DTC potential: Bringing together the resources of Paramount and WBD will create a combined company with an attractive direct-to-consumer footprint positioned for substantial profitability growth.
  • Pro-competitive: Combination of Paramount+ and HBO Max offers consumers a competitive direct-to-consumer service that increases choice and value by creating a meaningful competitor to the incumbent dominant Netflix and powerhouses Amazon and Disney.
  • Technology leadership: The group’s close technology relationship with Oracle and its ecosystem will provide it with significant engineering and innovation opportunities.
  • Broad sports rights portfolio: The combined company will create a premier platform for global sports across all distribution formats and hold sports rights including the NFL, Olympics, UFC, PGA Tour, NHL, Big Ten and Big 12 Football, NCAA College Basketball and Champions League, with the ability to distribute these rights collectively across all of our platforms.
  • Stronger linear networks: A more diversified and better-scaled suite of cable networks that will deliver content across general entertainment, sports and news coupled with its CBS Network and stations. This will dramatically improve cash flow and increase efficiencies, leading to a division more capable of managing structural linear declines, while providing advertisers with a more appealing partner that can provide cross-channel activations and sales.
  • Well-positioned to invest in growth: Combined balance sheet and cash flows will enable continued investment in growth initiatives, as demonstrated by the marquee deals announced by Paramount since the close of the Skydance merger – with Trey Parker and Matt Stone, the UFC, the Duffer Brothers and Activision, among others. The combined company’s resources and backing of Paramount’s committed investors will support increased investment in content generation, reinvigorating the media industry and enhancing competition.
  • Disciplined financial approach: Combined business will execute on a $6 billion-plus cost synergy opportunity, in addition to the more than $3 billion in standalone cost efficiencies that Paramount expects to achieve in its current transformation plans.

WBD shareholders can find additional information about Paramount’s superior proposal at StrongerHollywood.com.

Paramount’s tender offer is scheduled to expire at 5 p.m. Jan. 8, unless the offer is extended.