Warner Bros. Discovery board rejects rival bid from Paramount

Warner Bros. Discovery’s (WBD) board spurned Paramount Skydance’s (PSKY) $108.4-billion hostile takeover bid on Wednesday, calling the offer “illusory” as it accused the studio giant of misleading shareholders about its financing.

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Paramount and Netflix have been in a race to win control of Warner Bros., and with it, its prized film and television studios, HBO Max streaming service and franchises like Harry Potter. After Warner Bros. accepted the streaming giant’s offer, Paramount launched a hostile offer to outdo that bid.

In a letter to shareholders on Wednesday, the Warner Bros.’ board wrote that Paramount had “consistently misled” them by saying its $30-per-share cash offer was fully guaranteed, or “backstopped,” by the Ellison family, led by billionaire and Oracle co-founder Larry Ellison.

“It does not, and never has,” the board wrote of the guarantee of Paramount's offer, noting that the offer posed “numerous, significant risks.”

The board said it found Paramount’s offer “inferior” to the merger agreement with Netflix. Netflix’s $27.75 per share cash-and-stock offer for Warner Bros.’ unit is a binding agreement that requires no equity financing and has robust debt commitments, the board wrote.

The offer could be terminated or amended at any time prior to the deal’s completion, which is not the same as a binding merger agreement, the board said.

Warner Bros. has not yet set a date for a shareholder vote on the deal but it is expected to happen sometime in spring or early summer, its Chairman Samuel Di Piazza said in an interview with CNBC.

The Ellisons have cited their relationship with US President Donald J. Trump as a reason why the deal would face an easier regulatory path.

PARAMOUNT SAYS ITS OFFER IS SUPERIOR

Paramount accused Warner Bros. of hiding behind a “cloud of obfuscation” and said its all-cash bid provides more certainty against the “market fluctuations” than Netflix’s cash-and-stock offer, which has been reduced by a drop in its share price.