Paramount Makes Last Bid for Warner Bros Amidst Ongoing Negotiations

Paramount Skydance has been granted one final chance to secure Warner Bros Discovery, with a deadline of seven days to submit a “best and final offer.” This dramatic turn comes as Paramount seeks to disrupt Netflix’s existing agreement to acquire Warner Bros’ Hollywood studios and HBO Max streaming service.

Warner Bros recently reopened negotiations with Paramount after a communication from a banker hinted at a potential increase in Paramount’s bid. The current offer stands at 108.4 billion dollars, with Paramount indicating it will raise its offer to at least 31 dollars per share. This revision is expected to spark competition, as Netflix maintains a separate agreement to acquire selected assets at 27.75 dollars a share, equating to a valuation of 82.7 billion dollars.

Warner Bros faces mounting pressure from its board regarding the viability of the two competing proposals. Although the board has not found Paramount’s offer compelling enough to supersede the Netflix merger agreement, the prospect of increased bids could alter the landscape.

This new era of negotiations follows a period where Paramount’s previous bids were consistently rebuffed. Paramount had submitted six different offers over twelve weeks prior to Warner Bros announcing its deal with Netflix. The hostile bid launched by Paramount was rejected shortly thereafter, signalling the complexity of the negotiations.

If successful, this acquisition could reshape the entertainment landscape, granting ownership of Warner Bros’ extensive film and television library. This includes notable classics such as Casablanca and modern franchises including Friends and Batman.

Warner Bros continues to advance its plans for a shareholder vote on the Netflix bid, set for March 20. The acquisitions are anticipated to unfold following Warner Bros’ planned spin-off of its Discovery Global cable operations into a separate publicly traded entity, which could fetch between 1.33 dollars and 6.86 dollars per share, according to company estimates.

The engagement with Paramount represents a significant shift for Warner Bros, especially as activist investor Ancora Holdings has begun to exert pressure on the company. Ancora has taken a substantial stake and has signalled plans to oppose the Netflix transaction. Paramount is also working to influence the Warner Bros board by nominating directors, including a potential candidate from Pentwater Capital Management.

In light of the unfolding developments, it remains to be seen whether Paramount’s revised proposal will ultimately be recognised as superior.