IT House reported on February 16 that in the early hours of this morning, Beijing time, Bloomberg reported that Warner Bros. Discovery is re-evaluating whether it should restart negotiations with Paramount Sky Dance. According to people familiar with the matter, the latest revised offer submitted by Paramount has led the board of directors to seriously discuss whether it is possible to obtain a more attractive transaction package through Paramount.
Warner Bros. still has a legally binding acquisition agreement with Netflix, and the board of directors has not yet made a final decision.
Paramount made a number of concessions in the new plan, including assuming the $2.8 billion (IT House Note: current exchange rate is approximately 19.355 billion yuan) liquidated damages that Warner Bros. would have to pay if it terminated its agreement with Netflix, and providing guarantees for Warner Bros.'s debt refinancing. In addition, if the transaction is not completed by December 31, Paramount promises to compensate shareholders to demonstrate its confidence in the smooth passage of regulatory approvals.
This is the first time the board believes Paramount’s offer could be better than the existing deal, or at least force Netflix to raise its offer. At the same time, some shareholders continued to put pressure on the board of directors to initiate substantive contact with Paramount.
Warner Bros. has previously agreed to sell its Warner Bros. production business and HBO Max to Netflix for $27.75 per share. Paramount issued an acquisition invitation directly to shareholders with an offer of $30 per share and actively lobbied regulators to approve the transaction.
Paramount CEO David Ellison said that the current offer is not the final version; Netflix also hinted that there is room for upward adjustment. However, both sides are wary of excessive bidding. Netflix's stock price has fallen more than 40% since its high in June last year, as investors worry about transaction costs and risks.
If Warner Bros. renegotiates with Paramount, it must first notify Netflix and seek a further price increase from Paramount on top of the $30 price. If the board decides Paramount's offer is superior, Netflix has the right to match the offer.
Paramount took the initiative to launch an acquisition last year and raised prices several times, but ultimately lost to Netflix. Currently, its management continues to emphasize that its own plan has more advantages and is actively seeking regulatory and shareholder support. However, less than 2% of the shares currently respond to Paramount’s offer.
