Warner Bros. rejects Paramount’s latest offer and opts for a merger with Netflix

The board of directors of Warner Bros. Discovery (WBD) has decided “unanimously” reject Paramount Skydance (PSKY) takeover bidamended on December 22 to include a multimillion-dollar irrevocable personal guarantee from Larry Ellison, co-founder of Oracle. Specifically, it considers that it does not benefit the company or its shareholders, which is why it reiterates its recommendation in favor of the merger with Netflix.

“The board unanimously determined that Paramount’s latest offer remains inferior to our merger agreement with Netflix in multiple key respects,” said WBD Chairman of the Board Samuel A. Di Piazza. In this sense, the owner of HBO Max considers that Paramount’s latest offering still offers “insufficient value,” pointing out in particular the “extraordinary amount” in debt financing clauses that create risks for the closing of the transaction and reduce the protection of WBD shareholders if the acquisition is not completed.

In contrast, WBD’s board maintains that the binding agreement with Netflix, announced on December 5, will offer superior value with greater levels of certainty, without the significant risks and costs that Paramount’s offer would impose on shareholders. The purchase proposal proposed by PSKY for the entirety of WBD reaches an enterprise value of more than 108,000 million dollars (92,565 million euros), compared to almost 83,000 million dollars (70,875 million euros) of the platform offer streamingalthough this is only aimed at film and television studios, in addition to HBO Max and HBO.

After rejecting the offer initially raised by PSKY on December 8 in response to the agreement reached between WBD and Netflix, the multinational led by David Ellison presented a modified proposal on December 22, 2025 that, although it maintained the amount of the operation at around $108 billion, incorporated an irrevocable personal guarantee of $40.4 billion (34.5 billion euros) by Larry Ellison, father of PSKY’s CEO, in financing the offer.

In a letter sent by the board of directors of WBD to the company’s shareholders, published this Wednesday, the board of the multinational announces that it unanimously determined that “PSKY’s revised offer remains inadequate“. Especially considering the insufficient value it would provide, the lack of certainty about PSKY’s ability to complete it and the risks and costs that WBD shareholders would assume if it does not complete it, therefore unanimously recommending that WBD shareholders “not tender their shares in the PSKY offer.”

Offer lower than Netflix

In its analysis, the WBD board defends that PSKY’s offer “is inferior” due to the significant costs, risks and uncertainties compared to the merger with Netflix. According to the merger agreement with the Los Gatos platform, WBD shareholders will receive $23.25 in cash and Netflix common stock with a target value of $4.50, which has the potential for future value creation, in addition to the value they will receive through their stake in Discovery Global, which will be spun off from the business prior to the merger with Netflix into a separate listed company.

Likewise, the WBD board warns that the acceptance of PSKY’s offer would imply for the company the obligation to compensate Netflix with 2,800 million dollars (2,391 million euros) for breaking the current merger agreementas well as assuming a commission of 1.5 billion dollars (1.28 billion euros) for not completing the debt exchange and incurring additional interest expenses of approximately 350 million dollars (299 million euros). “The total cost to WBD would be approximately $4.7 billion (€4.013 million), or $1.79 per share,” the letter summarizes.

On the other hand, they point out that the extraordinary amount of debt financing, as well as other terms of PSKY’s offer, increase the risk of non-paymentespecially compared to the certainty of the merger with Netflix.

In this sense, they highlight that PSKY has a market capitalization of 14,000 million dollars (11,955 million euros) and requires debt and equity financing of 94,650 million dollars (80,824 million euros) for the transaction, which represents almost seven times its total market capitalization, so The transaction that PSKY proposes “would be the largest LBO (leveraged buyout) in history.” “This aggressive transaction structure poses considerably greater risk to WBD and its shareholders compared to the conventional structure of the merger with Netflix,” they warn.