Paramount‘s plans to take over Warner Bros. Discovery have been rejected again, and its CEO, David Ellison, has now sued WBD.
Paramount’s CEO and chairman, Ellison, has filed a lawsuit against Warner Bros. and is requesting that the company disclose financial details regarding streaming giant Netflix. Netflix’s deal with Warner Bros. equates to $83 billion, and the companies have been steadfast in their decision to merge despite Ellison’s relentless pursuits. Ellison shared his thoughts in an open letter to WBD shareholders and stated:
“WBD has failed to include any disclosure about how it valued the Global Networks stub equity, how it valued the overall Netflix transaction, how the purchase price reduction for debt works in the Netflix transaction, or even what the basis is for its ‘risk adjustment’ of our $30 per share all-cash offer.”
In Paramount’s suit, the company asked the Delaware Chancery Court to “simply direct WBD to provide this information so that WBD shareholders have what they need to be able to make an informed decision as to whether to tender their shares into our offer.” It’s unclear what chairman and CEO Ellison’s plans are once he discovers the numbers, or if it’s simply to detect any “unlawful” dealings as per his previous claims.
Warner Bros. and its board rejected Paramount’s offer eight times and instead chose to continue its deal with Netflix. Paramount offered an enterprise value of $108.4 billion at $30 per share. Despite the obvious increase, WBD and its board stated they were not comfortable with how Ellison and Paramount were obtaining the funds for the acquisition.
Warner Bros. and Netflix have not commented on Ellison’s recent lawsuit at the time of writing, but it is clear that they have no interest in pursuing a partnership with Paramount. It was only a few days ago that a letter was filed with the House Judiciary antitrust subcommittee by Paramount’s chief legal officer, Makan Delrahim, in which he stated that the merger will provide Netflix with “dominance in streaming video on demand.”
The Warner Bros. board stated the reasons for rejecting Paramount’s offer were due to the offer not being in the best interests of shareholders and not meeting the criteria of Netflix’s “superior proposal.” The chair of Warner Bros’ board of directors, Samuel Di Piazza Jr, stated the board was unanimous in its support of Netflix’s deal:
“Paramount’s offer continues to provide insufficient value, including terms such as an extraordinary amount of debt financing that create risks to close and lack of protections for our shareholders if a transaction is not completed. Our binding agreement with Netflix will offer superior value at greater levels of certainty, without the significant risks and costs Paramount’s offer would impose on our shareholders.”
Paramount will continue its pursuits, but the question remains whether Warner Bros. will listen, and as of writing, that is clearly not going to happen.