Warner Bros. Discovery has announced its negotiations with Paramount Skydance have been reopened after repeatedly rejecting the hostile bidder in favor of Netflix.
The up-for-sale studio announced the shocking move on Tuesday, saying it is giving Paramount the opportunity to provide its “best and final offer.”
Still, the Warner Bros. Board of Directors advises shareholders to back its pending merger with Netflix at a special meeting next month.
“Throughout the entire process, our sole focus has been on maximizing value and certainty for WBD shareholders,” Warner Bros. President and CEO David Zaslav said in a statement. “Every step of the way, we have provided PSKY with clear direction on the deficiencies in their offers and opportunities to address them. We are engaging with PSKY now to determine whether they can deliver an actionable, binding proposal that provides superior value and certainty for WBD shareholders through their best and final offer.”
Last week, Paramount amended its all-cash offer again by providing additional incentives that it argues outcompete Netflix’s bid.
Among the added guarantees was a “ticking fee” that pays Warner Bros. shareholders 25 cents per share if Paramount’s deal doesn’t go through by the end of the year. The fee amounts to a payment worth roughly $650 million for every quarter after Dec. 31 until the transaction has been approved.
Paramount also offered to pay the $2.8 billion termination fee that is required of Warner Bros. if the studio abandons its deal with Netflix.
However, the value of the hostile bid remained the same after Paramount declined to raise the price of its $30-per-share bid.
By resuming bidding talks, Warner Bros. is trying to get Paramount to increase its price to at least $31 per share. A Paramount representative said the company would raise the price if negotiations restarted, Warner Bros. noted in its press release.
Paramount now has a seven-day window to provide its final offer. Netflix provided the limited waiver, which expires Feb. 23.
While granting Paramount the opportunity, Netflix aggressively criticized the rival bidder.
“Throughout the robust and highly competitive strategic review process, Netflix has consistently taken a constructive, responsive approach with WBD, in stark contrast to Paramount Skydance (PSKY),” Netflix said in a statement of its own.
“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 caused by PSKY’s antics,” the streaming service added. “Accordingly, we granted WBD a narrow seven-day waiver of certain obligations under our merger agreement to allow them to engage with PSKY to fully and finally resolve this matter.”
Both bidders maintain that their offers face a more straightforward path to regulatory approval in the United States and abroad.
The Justice Department is currently reviewing both bids as they relate to antitrust concerns raised by Congress. President Donald Trump said he would stay out of the regulatory process and let the DOJ handle it.
The DOJ’s Antitrust Division made headlines late last week when Gail Slater stepped down as the department’s antitrust chief. It remains unclear if her decision was related to the federal review of the merger between Netflix and Warner Bros.
DOJ ANTITRUST SHAKE-UP REFLECTS EFFORT TO DEFINE ‘MAGA ANTITRUST’ AFTER SLATER EXIT
In the meantime, Paramount needs to make its final offer by next Monday. Warner Bros. will then have to decide whether it is better than Netflix’s offer.
Warner Bros. shareholders will vote on the Netflix merger agreement on March 20. For now, Warner Bros. is recommending its shareholders vote unanimously for Netflix and oppose Paramount.