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(Sharecast News) - The board of Warner Bros Discovery on Wednesday unanimously rejected Paramount Skydance's revised takeover offer, reiterating its preference for the $72bn tie-up with Netflix announced last month.
WBD released a statement to shareholders before markets opened, reiterating its recommendation to vote in support of the Netflix deal which offers "superior value" than PSKY's bid.
"The board unanimously determined that the Paramount's latest offer remains inferior to our merger agreement with Netflix across multiple key areas," said WBD chair Samuel Di Piazza.
The Netflix deal was agreed in early December, in which the streaming giant proposed paying shareholders $23.25 a share in cash and the equivalent of $4.50 a share in stock for Warner Bros, as well as the ability to retain shares in the soon-to-be-formed division, Discovery Global, following the planned split of WBD into two entities.
Two weeks later, PSKY then commenced a hostile tender offer to acquire WBD at $30 a share, though the terms of the deal would prevent WBD from pursuing its planned separation. WBD claims that the PSKY offer would also prevent it from completing a proposed debt exchange and refinancing, which would limit its financial flexibility.
Di Piazza said that the PSKY proposal provides "insufficient value" and highlighted risks associated with "an extraordinary amount of debt financing", resulting in a lack of protections for shareholders if the deal doesn't go through.
"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," he said.
WBD shares were trading 0.5% lower at $28.33 ahead of the opening bell on Wall Street, while Netflix was up 0.6% and PSKY was up 0.9%.
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