Paramount has gone straight to Warner Bros. Discovery’s shareholders with an all-cash offer in an extraordinary endeavor to gain control of Hollywood’s most sought-after prize, a bid that Netflix beat on Friday.
Paramount was widely expected to be the frontrunner for Warner Bros. But Warner Bros. opted instead for Netflix, which it said offered a more lucrative deal.
The proposed marriage with Netflix caught Hollywood insiders by surprise, including Paramount CEO David Ellison, who still contends that his deal was the better offer.
Ellison said they offered the shareholders US$17.6 billion more cash than the deal they currently have signed up with Netflix.
Paramount offered $30 per share in an all-cash deal for the entire company, while Netflix offered $27.75 for Warner Bros. and HBO, US$23.25 per share in cash and US$4.50 in stock.
The math is tricky, but Netflix believes the eventual spinoff of WBD’s cable assets, including CNN, which is not included in the Netflix deal, will be worth several dollars per share.
In its entirety, Netflix contends that its deal will ultimately be worth more than Paramount’s offer.
Paramount, unlike Netflix, is seeking to buy WBD in its entirety.
It notes its offer is worth US$108.4 billion for all of WBD, compared to $82.7 billion for Netflix’s offer, which doesn’t include the value of the company’s cable channels.
In accepting Netflix’s offer last week, WBD’s board clearly decided that the deal was better.
It has long been argued that the cable assets will be worth more when spun off than combined with the movie studio and HBO, unlocking significant value for shareholders.
Paramount said WBD shareholders should decide on Monday.
Source: CNN
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