Warner Bros. rejects Paramount's $20/share takeover bid as too low
What's the story
Warner Bros. Discovery has turned down an initial takeover offer from Paramount Global, deeming it too low. The proposed deal was around $20 per share, which Warner Bros. rejected in recent weeks, according to Bloomberg News. Now, Paramount is considering its options to pursue Warner Bros., including potentially raising its bid or seeking additional support from a financial partner.
Market dynamics
Paramount may go directly to Warner Bros.'s shareholders
Under David Ellison's leadership, Paramount is also weighing options like going directly to shareholders. CNBC recently reported that while the two companies are in talks, they disagree over price. To apply pressure on Warner Bros., Paramount could make its offer public to shareholders. As of Friday, Warner Bros.'s shares closed at $17.10 with a market cap of $42.3 billion, while Paramount's shares were at $17 each valuing it at $18.6 billion.
Leadership transition
Ellison took over Paramount in August
Ellison, son of billionaire Larry Ellison, took over Paramount in August after an $8 billion merger with his film production company Skydance Media. Paramount owns CBS, Nickelodeon, MTV, and the namesake movie studio. Recently, the company has been in talks with alternative asset manager Apollo Global Management for financial backing on its bid.
Strategic split
Warner Bros. planning to split into 2 businesses
Warner Bros. is planning to split into two businesses: one focused on cable TV and the other on streaming and studios. The deal is expected to be completed next year. Warner Bros.'s CEO David Zaslav believes he can get a hefty premium for his streaming and studios businesses once they're separated from debt-laden cable networks. To clinch a deal with Ellison, Zaslav will have to be convinced that he isn't leaving money on the table by selling before that happens.