Paramount took its battle for Warner Bros. Discovery directly to shareholders Monday, launching a $30-per-share all-cash tender offer for the entertainment giant just days after Warner agreed to a deal with Netflix.
The hostile bid values Warner at an enterprise value of $108.4 billion and represents a 139 percent premium to the company’s September 10 stock price of $12.54, before deal speculation began. Paramount argues its offer provides shareholders $18 billion more in cash than Netflix’s proposal.
Breitbart Business Digest mentioned Friday that Paramount was considering a hostile bid.
The move sets up a potential battle for control of Warner’s valuable assets, including HBO, CNN, and franchises like Harry Potter and DC Comics. Shareholders have until January 8 to decide whether to tender their shares, unless the timeline is extended.
Warner Bros. Discovery agreed Friday to a $72 billion deal with Netflix that would see the streaming giant acquire Warner’s studio and HBO Max streaming business for $27.75 per share in cash and stock after Warner splits itself in two. Netflix included a $5.8 billion breakup fee in the agreement, one of the largest on record.
Paramount’s offer covers the entirety of Warner, including its Global Networks segment that houses CNN, TBS, and HGTV. The company criticized Warner’s board for pursuing what it called an inferior proposal that would leave shareholders holding shares in a highly leveraged cable networks business with uncertain future value.
David Ellison, Paramount’s chairman and CEO, said the company submitted six proposals over 12 weeks that Warner never meaningfully engaged with. The tender offer will be fully financed by new equity backstopped by the Ellison family and RedBird Capital, along with $54 billion in debt commitments from Bank of America, Citi, and Apollo.
The hostile approach is particularly audacious given Paramount’s market value of around $14 billion compared to Netflix’s valuation exceeding $400 billion. Paramount shares fell nearly 10% Friday following news of the Netflix deal, an unusual reaction for a company that avoided a major acquisition expense.
Paramount is making both a financial and regulatory argument against the Netflix transaction. The company contends its deal would enhance competition while Netflix’s acquisition would create a streaming monopoly with 43% of global subscription video-on-demand subscribers. In many European Union countries, the combination would unite the dominant streaming player with the number two or three competitor.
President Trump weighed in Sunday evening, telling reporters that Netflix’s deal could face problems because it would give the streaming company significant market share. He indicated he would be involved in the decision.
If Paramount prevails, the iconic Warner studio and CNN would become part of the growing media empire of David Ellison and his father Larry Ellison, the Oracle co-founder who is close to President Trump. The Ellisons are already set to play a major role in TikTok’s U.S. operations following a preliminary deal brokered by the president.
Paramount outlined plans to maintain both studio operations, increase theatrical releases, and combine Paramount+ and HBO Max into a stronger competitor to Netflix, Amazon, and Disney. The combined company would hold an extensive portfolio of sports rights including the NFL, Olympics, UFC, and major college sports. Paramount projects the merger would generate more than $6 billion in cost synergies.
Warner shares closed Friday at $26.08, below Netflix’s offer price and suggesting market skepticism about whether that transaction will close. Both Paramount and Warner shares rose in premarket trading Monday, while Netflix shares were little changed.
If Warner walks away from its Netflix deal to pursue another suitor, it would owe Netflix $2.8 billion under their agreement. Netflix co-CEO Ted Sarandos has said the company is highly confident about obtaining regulatory approval.
Topping bids after a company has agreed to a deal are relatively rare in mergers and acquisitions, though they can occur when particularly valuable assets are in play. Earlier this year, a bidding war erupted for weight-loss drug startup Metsera after it agreed to sell to Pfizer, with Novo Nordisk ultimately making an unsolicited offer before Pfizer prevailed.
Harris Associates and Sessa Capital are among Warner’s largest shareholders. Paramount’s tender offer was approved unanimously by its board of directors and the company filed premerger notification under the Hart-Scott-Rodino Antitrust Improvements Act.
The Netflix deal represented a dramatic shift in strategy for the streaming company, which had previously built its business organically rather than through acquisitions. Its largest previous deal was valued at around $680 million.
Warner concluded that Netflix’s lower per-share offer was actually worth $31 to $32 per share because shareholders would continue to own stakes in both companies after Warner Discovery’s split, according to people familiar with the matter. Paramount disputed this reasoning as unsupported by business fundamentals.
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