Warner Bros Discovery board rejects Paramount tender offer

Warner Bros. Discovery Inc. (NASDAQ: WBD) announced that its board of directors unanimously determined that Paramount Skydance's (NASDAQ: PSKY) amended tender offer is not in the best interests of the company and its shareholders.

The board concluded that PSKY's offer, amended on December 22, 2025, does not meet the criteria of a "Superior Proposal" under Warner Bros. Discovery's existing merger agreement with Netflix Inc. (NASDAQ: NFLX) announced on December 5, 2025.

Under the Netflix merger agreement, Warner Bros. Discovery shareholders would receive $23.25 in cash and Netflix shares representing a target value of $4.50 based on a collar range in Netflix's stock price at closing. The board stated that accepting PSKY's offer would result in approximately $4.7 billion in costs, including a $2.8 billion termination fee to Netflix, a $1.5 billion fee for failing to complete a debt exchange, and approximately $350 million in incremental interest expense.

The board cited concerns about PSKY's ability to complete the transaction, noting that the company has a $14 billion market capitalization but requires $94.65 billion of debt and equity financing for the acquisition. PSKY would need to incur more than $50 billion in incremental debt, creating what the board described as the largest leveraged buyout in history with $87 billion of total pro forma gross debt.

Samuel A. Di Piazza Jr., chair of the Warner Bros. Discovery board, stated that PSKY's offer "continues to provide insufficient value" and creates risks due to "an extraordinary amount of debt financing."

The board noted that Netflix has a market capitalization of approximately $400 billion, an investment grade balance sheet, and estimated free cash flow of more than $12 billion for 2026, compared to PSKY's "junk" credit rating and negative free cash flows.

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