Paramount’s chances of buying Warner Bros Discovery have possibly improved after WBD’s board agreed to re-open talks with the studio.
In December WBD accepted Netflix’s $82.7 billion offer to buy its studio and streaming business, leaving shareholders with ownership of a separate business based around WBD’s portfolio of linear channels.
Paramount had already made several offers for the entire Warner Bros. Discovery business, each of which were rejected the WBD board.
News of the Netflix deal prompted a frustrated Paramount to launch a hostile takeover bid, seeking to buy a controlling stake directly from WBD’s shareholders.
This pressure ultimately led to Netflix simplifying its offer, moving from a cash and stock deal to an all-cash structure.
Then, last week, Paramount significantly sweetened its offer by agreeing to fund a $2.8bn termination fee WBD would have to pay if it walked away from the Netflix deal.
It also offered WBD shareholders additional money for every quarter that the deal hasn’t closed beyond December 31st.
According to Warner Bros in a statement released on Tuesday, a senior Paramount representative has recently informed a WBD board member that, if the WBD board authorised discussions, the firm would agree to pay $31 per share and that the latest offer was not its “best and final” proposal.
WBD says it’s standing by the Netflix deal but will enter into a seven-day period of talks with Paramount (referred to as PSky in the statement) “to seek clarity for WBD stockholders and provide PSky the ability to make its best and final offer.”
The talks would also be an opportunity to “discuss the deficiencies that remain unresolved and clarify certain terms of PSky’s proposed merger agreement”.
Under the terms of its deal, Netflix has the right to make any rival offer.
“Throughout the entire process, our sole focus has been on maximizing value and certainty for WBD shareholders,” said David Zaslav, President and Chief Executive Officer of Warner Bros. Discovery.
“Every step of the way, we have provided PSky with clear direction on the deficiencies in their offers and opportunities to address them.
“We are engaging with PSky now to determine whether they can deliver an actionable, binding proposal that provides superior value and certainty for WBD shareholders through their best and final offer.”
Warner Bros Discovery has also set March 20th as the date for its shareholders to vote on the Netflix deal.