Paramount has sweetened its £80billion offer for Warner Bros Discovery as it steps up efforts to gatecrash Netflix’s deal to buy the Hollywood studio.
In the latest twist in the blockbuster takeover battle, Paramount said it will cover the £2billion breakup fee that Warner Bros would have to pay Netflix if it terminates its agreed deal with the streaming giant.
Paramount, which is behind films including The Godfather and Top Gun as well as TV shows such as Landman and Tulsa King, also added a so-called ‘ticking fee’ of £485million.
This would payable to Warner Bros shareholders for each quarter beyond the end of this year that the transaction is not completed – suggesting it is confident of overcoming regulatory hurdles already facing Netflix such as concerns over its dominance in streaming.
‘We are making meaningful enhancements – backing this offer with billions of dollars, providing shareholders with certainty in value, a clear regulatory path, and protection against market volatility,’ said Paramount boss David Ellison.
Hollywood blockbuster: Paramount is bidding to gatecrash Warner Bros’ deal with Netflix
The board of Warner Bros has already backed the £60billion takeover of its film studios and HBO streaming arm by Netflix.
Paramount is attempting to hijack the deal with a rival offer for the whole of Warner Bros including its cable TV channels such as CNN and TNT Sports and the Discovery+ streaming service.
Last month, Warner Bros rejected Paramount’s bid as ‘inadequate’ and analysts suggested the latest offer may not be enough to win the board over.
‘The sweetened deal is unlikely to sway Warner Bros away from Netflix and toward Paramount, said Ross Benes, senior analyst at Emarketer.
‘Paramount is throwing spaghetti at the wall and hoping something sticks,” said Ross Benes, senior analyst at Emarketer.
‘Outside of raising its price, Paramount’s best chance at stealing WBD is from outside regulators blocking Netflix.’
Danni Hewson, head of financial analysis at AJ Bell, added: ‘Akin to one of the films all parties in the battle for Warner Bros would love to produce, today brought a new and novel twist to the takeover saga.
‘Although it stopped short of sweetening the actual pot, Paramount has dredged up some tasty side dishes in a bid to sour the fledgling romance between the Warner Bros board and its preferred suitor Netflix.
‘Offering a so-called ticking fee suggests a certain degree of confidence that its deal would clear regulatory hurdles without too much of a fight, and Paramount’s proposal to pay Netflix’s termination fee if Warner Bros does switch suitors could sway some investors over to its side.
‘But the fundamentals of the deal and the entertainment landscape remain the same, and investors may have already concluded that the Warner Bros board is on the right track in terms of the studio’s future.’
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