Warner Bros. refuses. Discovery bids for Paramount again, calls it ‘leveraged buyout’

The bidding war for Warner Bros. continues. Discovery (WBD) and its extensive library of hit TV shows and movies like “Harry Potter,” “Game of Thrones” and DC Comics titles continues.

The studio said Wednesday that its board of directors unanimously rejected Paramount Skydance’s revised $108.4 billion offer, calling the proposal a “leveraged takeover” that would saddle the company with $87 billion in debt.

In a letter to shareholders, WBD urged them to reject the offer, saying the “extraordinary amount” of debt Paramount would need to raise increases the risk of the deal failing, and recommended instead voting in favor. Earlier, an $82.7 billion deal with Netflix As confirmed by the film and television studio.

Paramount, which was rumored to be on track to buy WBD before the Netflix deal was announced, went directly to WBD shareholders for $ An all-cash offer of $30 per share In early December after the board of directors of Warner Bros decided to sell to Netflix. But WPD unacceptable Paramount’s offer, called the offer “fictitious” and said Paramount did not have the funds to back up its claims, and instead recommended a cash-and-stock deal for Netflix.

Paramount then returned with A.J Guarantee of $40 billion From CEO David Ellison’s billionaire father, Oracle co-founder Larry Ellison, said it would raise $54 billion in debt to finance the deal.

WBD doesn’t seem convinced. “(Paramount) is a company with a market capitalization of $14 billion and is attempting an acquisition that requires $94.65 billion of debt and equity financing, approximately seven times its total market capitalization (…) This aggressive transaction structure poses a materially greater risk to WBD and its shareholders than the traditional Netflix merger structure,” WBD wrote in a statement. statement.

Warner Bros. also questioned in Paramount’s ability to do well if the deal goes through, arguing that raising such amounts of debt would further worsen Paramount’s existing “junk” credit rating.

Warner Bros. was I’m particularly concerned about Paramount’s negative free cash flow, which could be exacerbated by any acquisition. “By contrast, Netflix is ​​a company with a market cap of about $400 billion, an investment-grade balance sheet, an A/A3 credit rating and estimated free cash flow of more than $12 billion for 2026,” WBD wrote.

Netflix Welcome WBD’s decision, saying that following the merger, the two companies will bring together highly complementary strengths and a shared passion for storytelling.