Netflix (NFLX) co-CEO Greg Peters said the company expects to secure support from Warner Bros Discovery (WBD) shareholders for its $82.7B bid for the company’s film and TV studios, adding that Paramount’s (PSKY) rival bid “doesn’t pass the sniff test”, the Financial Times reported on Friday.
Peters told the FT in an interview that only a “very small” number of WBD shares had been tendered in support of Paramount’s hostile $108B bid for the entire company.
Earlier this week, Netflix (NFLX) made a revised all-cash offer for Warner Bros. Discovery (WBD) at $27.75 per share. Warner Bros. (WBD) said it will hold a special meeting of shareholders to vote on the deal before April.
Peters said Netflix’s revised bid provided “greater deal certainty” than Paramount’s bid, which is partly financed with $55B in debt, highlighting Netflix’s strong balance sheet.
Earlier this month, the Warner Bros board rejected an amended Paramount offer that included $40B in equity financing, personally guaranteed by Larry Ellison, the father of Paramount CEO David Ellison.
“Without Larry Ellison independently financing this thing, there’s no chance in hell Paramount would ever be able to pull this off,” Peters said.
“Paramount already is saddled with quite a lot of debt,” he added, describing the additional leverage needed to finance its $30-per-share offer as “pretty crazy”.
After WBD’s board rejected its latest bid, Paramount put its offer directly to shareholders. “If they were to move [higher], what kind of leverage would they have to have?” Peters said. “It’s hard to imagine how that works out well.”
Peters added: “It doesn’t pass the sniff test in my mind. And that’s what the Warner Brothers board determined. And I think that’s where the Warner shareholders are at too.”
Paramount Skydance (PSKY) on Thursday extended the deadline for its hostile tender offer to February 20, shortly after Netflix revised its bid to an all-cash offer to speed up closing and provide greater certainty to investors.
Under the terms of the initial agreement announced December 5, Netflix (NFLX) proposed to acquire Warner Bros. (WBD), including its film and television studios, HBO Max, and HBO, in a cash-and-stock transaction valued at $27.75 per WBD share, with a total enterprise value of approximately $82.7B billion (equity value of $72B).
Paramount Skydance (PSKY) later unveiled a hostile offer of $30 in cash per share for the entire company.