Warner Bros rejects Paramount’s new US$108 billion bid, prefers Netflix deal

Warner Bros Discovery’s board has unanimously turned down Paramount Skydance’s (PSKY) latest attempt to acquire the studio, saying its revised US$108.4 billion ‌hostile bid amounted to a risky leveraged buyout that investors should reject.

In a letter to shareholders on Wednesday, Warner Bros’ board said Paramount’s offer hinges on “an extraordinary amount ‍of debt financing” that heightens the risk of closing. It reaffirmed its commitment to streaming giant Netflix’s US$82.7 billion deal for the film and television studio and other assets.

Paramount and Netflix have been vying to win control of Warner Bros, and its prized film and television studios and its extensive content library. Its lucrative entertainment franchises include Harry Potter, Game of Thrones, Friends and the DC Comics universe, as well as coveted classic films such as Casablanca and Citizen Kane.

Paramount’s financing plan would saddle the smaller Hollywood studio with US$87 ⁠billion in debt once the acquisition closed, making it the largest leveraged buyout in history, the Warner Bros board told shareholders after voting against the US$30-per-share cash offer on Tuesday. The letter accompanied a 67-page amended merger filing where it laid out its case for rejecting Paramount’s offer.

The revised Paramount offer “remains inadequate particularly given the insufficient value it would provide, the lack of certainty in PSKY’s ability to complete the offer, and the risks and costs borne by WBD shareholders should PSKY fail to complete the offer,” the Warner Bros board wrote.