Warner Bros rejects revised Paramount bid as risky leveraged buyout

Warner Bros Discovery’s (WBD’s) board has unanimously turned down Paramount Skydance’s latest attempt to acquire the studio, saying its revised $108.4 billion hostile bid amounted to a risky leveraged buyout that investors should reject.

- DAWN CHMIELEWSKI, KRITIKA LAMBA & DAWN KOPECKI

In a letter to shareholders on Wednesday, Warner Bros’ board said Paramount’s offer hinges on “an extraordinary amount of debt financing” that heightens the risk of closing. It reaffirmed its commitment to streaming giant Netflix’s $82.7 billion deal for the film and television studio and other assets.

Paramount and Netflix have been vying to win control of Warner Bros, and with it, its prized film and television studios and its extensive content library. Its lucrative entertainment franchises include “Harry Potter”, “Game of Thrones”, “Friends” and the DC Comics universe, as well as coveted classic films such as “Casablanca” and “Citizen Kane.” Paramount's financing plan would saddle the smaller Hollywood studio with $87 billion in debt once the acquisition closed, making it the largest leveraged buyout in history, the Warner Bros board told shareholders after voting against the $30-per-share cash offer on Tuesday. The letter accompanied a 67-page amended merger filing where it laid out its case for rejecting Paramount's offer.