"Decide Within Seven Days"...Warner Issues Final Ultimatum to Paramount

Financial News, New York – Correspondent Lee Byung-chulWarner Bros. Discovery (WBD) has given Paramount a seven-day deadline for negotiations. The message is that Paramount must come back with a final offer that tops the $83 billion acquisition deal it reached with Netflix, or step aside.
On the 17th (local time), WBD announced that it would hold an additional week of talks with Paramount. To enable this, Netflix agreed to grant a limited waiver of certain obligations under its merger agreement. The new round of discussions is meant to confirm, once and for all, whether Paramount is willing to raise its price.
The situation is complex. Netflix has already signed a deal to acquire WBD for $83 billion. Paramount, by contrast, has put forward a $108 billion hostile takeover bid for all of WBD, including its cable TV assets. Paramount’s offer is larger in headline value, but the structure, regulatory risks, and feasibility differ significantly.
WBD’s board of directors still backs the Netflix transaction. A shareholder vote on the Netflix acquisition is scheduled for March 20. The board has recommended that shareholders reject Paramount’s proposal.
The latest negotiations were triggered when a senior Paramount executive indicated to WBD that the company could raise its offer from $30 to $31 per share. There were also hints that an even higher price might be possible, but no formal increased bid has been submitted.
WBD investors are setting the bar higher. Market signals suggest that, for a competing bid to be taken seriously, Paramount would need to offer at least $33 per share.
Inside Paramount, many believe the existing proposal has a better chance of winning antitrust approval than the Netflix deal. However, there are reported internal disagreements over how far the company can go in raising its price.
Paramount recently tweaked its $108 billion hostile bid by adding compensation terms for shareholders in the event of regulatory approval delays. It did not, however, increase the headline price. At the same time, the company has raised doubts about Netflix’s ability to secure regulatory clearance.
Netflix pushed back, saying, "Paramount does not have an easier or faster path to regulatory approval." It also argued that Paramount is downplaying the complexity of the review process and misleading WBD shareholders.


pride@fnnews.com Correspondent Lee Byung-chul Reporter