Paramount’s revised Warner Bros bid fails to sway key shareholders

Paramount Skydance’s revised takeover bid for Warner Bros Discovery has failed to fully win over key shareholders, despite significant changes to its financing structure. Harris Oakmark, Warner Bros’ fifth-largest shareholder with a 4% stake, said the updated offer was “necessary, but not sufficient” and indicated it would hold out for better terms, according to a report by Reuters.

On December 22, Paramount amended its US$108.4 billion hostile bid to address investor concerns around financing. Oracle co-founder Larry Ellison, whose son David Ellison controls Paramount, agreed to personally guarantee US$40.4 billion of the offer, much of which had previously been held in a revocable trust. Paramount also increased its regulatory break fee to US$5.8 billion from US$5 billion, matching Netflix’s competing proposal, while maintaining its US$30-per-share offer price.

Despite these changes, Warner Bros Discovery’s board unanimously reiterated its recommendation that shareholders reject Paramount’s bid in favour of Netflix’s lower US$23.25-per-share offer. The board said Netflix’s proposal provided a “full backstop” due to its more secure financing and included US$4.50 per share in Netflix stock, along with proceeds expected from the planned spin-off of Discovery Global.

The tender offer deadline for Paramount has been extended to January 21 from January 8. The bidding contest highlights the perceived value of Warner Bros’ assets, which include HBO Max and major franchises such as Harry Potter, The Lord of the Rings and Superman. Investors must now weigh higher headline value against financing certainty as the decision deadline approaches.