According to a report by The New York Post late on Thursday, people at Paramount Skydance (PSKY) and partners at RedBird Capital are considering a “DefCon 1”-type plan amid their pursuit of Warner Bros. Discovery (WBD).
The Ellisons and RedBird are reportedly mulling walking away from their bid for Warner Bros., including their hostile takeover approach, and taking the HBO owner to court instead over how they handled the whole process, in which they deemed Netflix’s (PSKY) offer “superior.”
“The last option is ‘DefCon 1,’ and that could mean filing a lawsuit charging that WBD ran a bidding process that favored an inferior bid from Netflix,” the report said, citing people with direct knowledge of the matter.
The NYP report said people at Paramount allege that directors and management favored Netflix’s cash-stock offer throughout the bidding process because of a personal bond between WBD chief David Zaslav and Netflix CEO Ted Sarandos.
But people at Warner Bros. claim Zaslav repeatedly met with the Ellisons, spending more time with them than anyone at Netflix, before making a deal with the streaming giant, the report said.
Paramount has made at least six offers to buy Warner Bros. in its entirety and also amended its $30 per share bid to include a personal equity financing guarantee of more than $40B from billionaire Larry Ellison and a higher termination fee, among other things. WBD is yet to publicly comment on Paramount’s revised bid and the financing guarantees coming from the Oracle founder.
Warner Bros. and its stockholders have indicated that, albeit the amendments were necessary, they expect a higher offer from the David Ellison-led company. Sources told NYP that they expect the offer to be raised close to $33 or $34 a share.