In a statement, Warner Bros said Paramount had informally floated a higher price of $31 per share, prompting the board to consider further discussions, News.Az rpeorts, citing Reuters.
Paramount now has until February 23 to present its “best and final offer,” which Netflix would have the right to match under the existing merger agreement.
“To be clear, our Board has not determined that your proposal is reasonably likely to result in a transaction that is superior to the Netflix merger,” Chairman Samuel DiPiazza Jr. and CEO David Zaslav wrote in a letter to Paramount’s board. “We continue to recommend and remain fully committed to our transaction with Netflix.”
According to the letter, a Paramount financial adviser indicated the bid could be raised to $31 per share — or potentially higher — if negotiations are opened. Paramount’s current offer values the entire company at $108.4 billion, compared with Netflix’s $82.7 billion proposal for Warner Bros’ studio and streaming businesses.
Warner Bros is moving ahead with a shareholder vote on Netflix’s $27.75-per-share bid for its studio and streaming operations. The vote is scheduled for March 20 and would follow the planned spin-off of Discovery Global’s cable assets — including CNN, TLC, Food Network and HGTV — into a separate publicly traded entity. Warner Bros estimates Discovery Global could be worth between $1.33 and $6.86 per share.
The decision to engage with Paramount required a special waiver from Netflix and marks a shift in Warner Bros’ stance. Paramount previously accused the board of failing to meaningfully engage on six earlier offers before Warner Bros agreed to merge with Netflix in December. A public hostile bid launched shortly afterward was rejected.
A revised Paramount proposal in early January — reportedly backed by a $40 billion equity guarantee from Oracle founder Larry Ellison, father of Paramount CEO David Ellison — was also turned down.
Warner Bros’ willingness to consider a competing offer comes amid pressure from activist investor Ancora Holdings, which has built a stake in the company and plans to oppose the Netflix deal. Paramount has also sought to add new directors to Warner Bros’ board, with Pentwater Capital Management CEO Matt Halbower emerging as a potential nominee. Pentwater, which holds about 50 million shares in Warner Bros, supports Paramount’s bid.
Under the merger agreement, Warner Bros may negotiate with rival bidders only if its board believes the proposal could reasonably lead to a superior transaction.
Netflix said it remains confident in its deal and noted that shareholders will soon vote on the proposed merger. “While we are confident that our transaction provides superior value and certainty, we recognize the ongoing distraction for WBD stockholders and the broader entertainment industry,” the company said in a statement.
