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Warner Bros. will reopen takeover talks with Paramount Skydance after receiving a seven-day waiver to do so from its preferred bidder, Netflix.
Warner Bros. Discovery — which owns HBO Max and a wealth of valuable titles from the Harry Potter series to the DC superhero franchise — said in a regulatory filing Tuesday that the waiver will allow it to discuss unresolved “deficiencies” in Paramount’s previous offers.
The company now has until Monday to negotiate a possible transaction with Paramount Skydance. Netflix is also allowed to match Paramount’s offer under the terms of its merger.
Warner Bros. has previously rejected Paramount’s offers, which included a hostile bid by Paramount in December. But just because talks are resuming now doesn’t mean Warner has changed its position, which the company made clear in its response.
“Our board has not determined that your proposal is reasonably likely to result in a transaction that is superior to the Netflix merger,” Warner Bros. chairman Samuel DiPiazza Jr. and CEO David Zaslav said in a letter sent Tuesday to the Paramount board.
“We continue to recommend and remain fully committed to our transaction with Netflix.”
Netflix has agreed to buy Warner Bros. Discovery’s TV and film studios and streaming division for $72 billion US. If the deal gets regulatory approval, it would shift the media landscape, and some movie theatre companies are voicing concern for their future.
In a statement of its own, Netflix also expressed confidence in the deal it has already reached with Warner Bros.
“While we are confident that our transaction provides superior value and certainty, we recognize the ongoing distraction for WBD stockholders and the broader entertainment industry caused by PSKY’s antics,” Netflix said in a statement.
“Accordingly, we granted WBD a narrow seven-day waiver of certain obligations under our merger agreement to allow them to engage with PSKY to fully and finally resolve this matter.”
Warner’s leadership consistently has backed the offer from Netflix. In December, Netflix agreed to buy Warner’s studio and streaming business for $72 billion US — now in an all-cash transaction that the companies have said will speed up the path to a shareholder vote by April. Including debt, the enterprise value of the deal is about $83 billion, or $27.75 per share.
Unlike Netflix, Paramount wants to acquire Warner’s entire company — including networks like CNN and Discovery — and went straight to shareholders with an all cash, $77.9-billion US offer in December.
Front Burner23:03The politics of the Warner Bros. bidding war
Paramount’s current offer for the whole company comes to $108.4 billion US, while Netflix is offering $27.75 US a share, or $82.7 billion US, just for its studio and streaming businesses.
Warner Bros. has a special meeting scheduled for Friday and shareholders will vote on the Netflix merger on March 20. The company’s stock rose more than two per cent before the market opened on Tuesday. Shares of Paramount Skydance climbed nearly three per cent, while Netflix’s stock rose slightly.
