Paramount Skydance Corporation (PSKY) is taking its fight for Warner Bros. Discovery (WBD) straight to shareholders, unveiling a hostile offer of $30 in cash per share for the entire company.
The offer has been approved by Paramount’s board of directors, and crucially, is not its “best and final” offer for Warner Bros. (WBD).
“We believe the WBD Board of Directors is pursuing an inferior proposal which exposes shareholders to a mix of cash and stock, an uncertain future trading value of the Global Networks linear cable business and a challenging regulatory approval process. We are taking our offer directly to shareholders to give them the opportunity to act in their own best interests and maximize the value of their shares,” Paramount Skydance CEO David Ellison said.
Paramount’s (PSKY) proposal values Warner Bros. Discovery at an enterprise value of $108.4B, significantly higher than Netflix’s (NFLX) accepted offer with an EV of $82.7B, which involves a payment of $27.75 per share—$23.25 in cash and $4.50 in stock—subject to a collar and Netflix’s future performance.
Additionally, the Paramount (PSKY) deal keeps Warner Bros. Discovery (WBD) intact, while the Netflix (NFLX) offer is for only the streaming and studio business.
By accepting the Netflix (NFLX) offer, the Warner Bros (WBD) board believes that separating the more lucrative studio and streaming business from Global Networks unlocks more value for shareholders, thereby making the Netflix (NFLX) offer more attractive than Paramount’s (PSKY) offer for the whole company.
But by splitting off Global Networks (CNN, TNT, TLC) as a separate company, Paramount (PSKY) argues that the Netflix (NFLX) offer would expose WBD shareholders to a “highly levered and structurally declining” asset. Paramount (PSKY) values Global Networks at just $1 per share.
Paramount CEO David Ellison was motivated to take his offer directly to shareholders because of what he called a “disadvantaged consideration throughout the process,” claiming Warner Bros (WBD) board never even responded to Paramount’s superior offer.
The acquisition is also favorable to Paramount (PSKY) shareholders, Ellison argues, as a combined PSKY-WBD would create $70B in revenue, $16B in EBITDA, and $10B in cash flow, while also presenting a credible competitor to streaming services Netflix (NFLX), Amazon Prime (AMZN), and Disney (DIS).
The hostile bid is driving up shares of both Paramount Skydance (PSKY) and Warner Bros. Discovery (WBD), leaving Netflix (NFLX) shares in the red for a fourth consecutive day.
Investor optimism around a PSKY–WBD merger is spilling over into theater stocks as well, with IMAX (IMAX) and Cinemark (CNK) gaining over 6% Monday after Paramount’s (PSKY) bid. The reaction reflects expectations that this deal would preserve theatrical releases, unlike a potential NFLX–WBD combination that would result in more studio releases on the streaming platform.