Warner Bros Discovery Denies Paramounts Bid Again Calls It A Leveraged Buyout
Warner Bros Discovery has rejected Paramount’s $108.4 billion bid again, calling it risky due to high debt concerns. Netflix’s offer remains preferred.
Los Angeles: Warner Bros. Discovery (WBD) is in a bidding war for its valuable library of shows and films. Recently, WBD rejected a new bid from Paramount Skydance worth $108.4 billion. WBD’s board thinks this proposal could put the company in great debt because it would come with $87 billion in loans, making it a “leveraged buyout.”
WBD told its shareholders to dismiss the offer because the large debt could cause problems. Instead, they suggested accepting an earlier deal with Netflix worth $82.7 billion. Paramount had tried to buy WBD before the Netflix deal was announced. After being denied, it made an all-cash offer of $30 for each share back in December.
WBD thought this cash offer was “illusory,” meaning it doubted Paramount had enough money to fulfill it. So they encouraged shareholders to stick with Netflix. Once more, Paramount promised a $40 billion safety net from a wealthy backer, Larry Ellison, while also planning to raise $54 billion in debt.
However, WBD is still skeptical. They mentioned that Paramount has a market value of $14 billion but wants to borrow almost $95 billion. This could be very risky for both WBD and its shareholders. WBD explained that Paramount’s current financial problems would only get worse if the deal went through.
In comparison, WBD pointed out that Netflix is in a much stronger financial position. Netflix has a market value around $400 billion and a good credit rating. They also expect to have over $12 billion in free cash flow by 2026. Netflix was happy with WBD’s decision, saying the two companies could work well together and share their love for storytelling.