Key Facts
- ✓ Paramount Skydance filed a lawsuit in Delaware Chancery Court against Warner Bros. Discovery.
- ✓ WBD agreed to sell its streaming and movie businesses to Netflix for $82.7 billion in December.
- ✓ Paramount's hostile takeover bid for all of WBD is valued at $108.4 billion.
- ✓ Netflix's offer equates to $27.72 per share, while Paramount's offer is $30 per share all-cash.
- ✓ The deadline for WBD shareholders to tender shares under Paramount's offer is January 21.
Quick Summary
Paramount Skydance has intensified its hostile takeover attempt of Warner Bros. Discovery by filing a lawsuit in Delaware Chancery Court. The lawsuit is a direct challenge to WBD's planned $82.7 billion sale of its streaming and movie assets to Netflix. Paramount contends that its own $108.4 billion offer provides superior value to WBD shareholders.
The legal filing requests that the court compel WBD to reveal the valuation methods used for the Global Networks division and the Netflix transaction. Paramount CEO David Ellison communicated these developments to WBD shareholders in an effort to secure tenders for the January 21 deadline. WBD has responded by calling the lawsuit 'meritless' and asserting that Paramount's proposal is financially inadequate.
The Legal Challenge
Paramount Skydance escalated its hostile takeover bid of Warner Bros. Discovery today by filing a lawsuit in Delaware Chancery Court. The suit declares Paramount's intention to fight Netflix's acquisition of WBD assets. This legal maneuver is the latest development in a high-stakes corporate battle.
In December, WBD agreed to sell its streaming and movie businesses to Netflix for $82.7 billion. Under the terms of that agreement, WBD’s Global Networks division—comprising the company's legacy cable networks—would be spun out into a separate entity called Discovery Global. Paramount is seeking to disrupt this arrangement through the courts.
"meritless"
— Warner Bros. Discovery
Valuation Dispute
The core of the dispute lies in the differing valuations presented by the two companies. While the Netflix deal values WBD's assets at $82.7 billion, Paramount has submitted a competing bid valuing the entire company at $108.4 billion. Paramount has aggressively tried to convince WBD’s shareholders that its all-cash offer is superior to the Netflix deal.
The lawsuit specifically requests the court to force WBD to disclose:
- How it valued the Global Networks stub equity
- How it valued the overall Netflix transaction
- How the purchase price reduction for debt works in the Netflix transaction
- The basis for its 'risk adjustment' regarding Paramount's offer
Paramount hopes obtaining this information will encourage more WBD shareholders to tender their shares under Paramount's offer by the January 21 deadline.
Shareholder Offer Comparison
David Ellison, the CEO of Paramount, wrote a letter to WBD shareholders informing them of the lawsuit and urging them to consider the Paramount offer. The letter highlights the financial differences between the two potential outcomes for shareholders. Paramount is seeking to leverage the legal action to gain a strategic advantage.
The financial breakdown of the competing offers shows a distinct difference in value per share. Netflix's offer equates to $27.72 per share, which includes $23.25 in cash and shares of Netflix common stock. In contrast, Paramount's offer is an all-cash bid of $30 per share. Paramount argues this represents a significant premium over the Netflix deal.
WBD Response
Warner Bros. Discovery has pushed back against Paramount's legal and financial maneuvers. The company has publicly labeled the lawsuit as 'meritless'. WBD maintains that its agreement with Netflix represents the best path forward for the company and its shareholders.
Furthermore, WBD has characterized Paramount's $108.4 billion offer as deficient. Despite the lower valuation claims from Paramount, WBD is standing by its decision to proceed with the Netflix transaction while fighting the hostile takeover attempt in court.
