Warner Bros Discovery likely to reject Paramount Skydance hostile bid despite Ellison guarantee

Warner Bros Discovery is likely to reject Paramount Skydance’s revised $108.4 billion hostile takeover bid despite a personal equity guarantee from billionaire Larry Ellison, according to a person familiar with the matter, Reuters reported. The board has not taken a final decision but is expected to meet next week to consider the offer, the person informed, speaking on condition of anonymity due to the sensitivity of internal discussions.

Warner Bros and Paramount declined to comment on the board’s position, CNBC earlier reported. A rejection would keep Warner Bros on course to pursue a rival cash-and-stock deal with Netflix, even as Paramount sought to strengthen its proposal.

Ellison, whose son David Ellison serves as chairman and chief executive of Paramount, personally guaranteed the equity backing the bid in an effort to address concerns that had weighed on the earlier offer, Reuters said. While Paramount did not raise its $30-per-share all-cash proposal, it increased its regulatory reverse termination fee to match that offered by Netflix and extended the tender offer deadline.

Netflix’s competing $82.7 billion bid, although lower in headline value, offers greater financing clarity and fewer execution risks, analysts have stated. Under the terms of the Netflix agreement, Warner Bros would be required to pay a $2.8 billion break-up fee if it were to walk away from the deal.

Harris Oakmark, Warner Bros’ fifth-largest shareholder with a holding of 96 million shares, stated that Paramount’s revised offer was not sufficient and added that it failed to adequately cover the potential break-up fee. Paramount has countered that its bid would face fewer regulatory hurdles, arguing that a combined Paramount-Warner Bros entity would create a studio larger than Disney and unite two major television operators.

Warner Bros’ board had previously urged shareholders to reject Paramount’s $108.4 billion offer for the entire company, including its cable television assets, citing concerns over financing certainty and the absence of a comprehensive guarantee from the Ellison family, Reuters reported. Paramount has also argued that its proposal is more insulated from market volatility than Netflix’s bid, whose value fluctuates with Netflix’s share price.

The proposed deals have drawn political scrutiny, with lawmakers from both major U.S. parties expressing concerns about further consolidation in the media sector. U.S. President Donald Trump has stated that he plans to weigh in on the potential acquisition.