According to Reuters and AP reports, Paramount offered Warner Bros. major shareholders to acquire the company for $30 cash per share. Netflix said earlier on the 5th that it had signed a final contract to acquire Warner Bros. for $72 billion. The acquisition price per share was $27.75. The Warner Bros. Discovery board said it would consider Paramount’s offer later in the day, but advised the company not to take any action at this time, saying it would not change its previous decision to sell it to Netflix.
Adversarial mergers and acquisitions refer to mergers and acquisitions unilaterally pursued by a company that intends to acquire without the consent of the management of the other company. It ignores existing management and uses measures such as tender offers to the market or shareholders to sell stocks at a higher price than the current price.
“Our proposal is much more favorable than Netflix, provides $18 billion more cash to shareholders, and the regulatory approval process is simple,” Paramount argued. Paramount explained that after Warner Bros. made the sale official in October, it offered six acquisitions, but “Warner’s management has not made any substantial negotiations” and turned to a hostile takeover.
Paramount has proposed to acquire the cable TV networks of Warner Bros. such as CNN and Discovery. In contrast, Netflix has limited its scope to movies, television, HBO and HBO Max streaming services, except for cable broadcasting.
Paramount will receive funding from an investment company run by U.S. President Donald Trump’s son-in-law Jared Kushner, which is advantageous for persuading Trump. Funds from three Gulf states known as Saudi Arabia, the United Arab Emirates, and Qatar government funds will also participate. The Trump family signed real estate contracts with resorts in Saudi Arabia and Qatar this year. Notably, since Paramount is managed by David Ellison, the son of Larry Ellison, the world’s second richest man who is close to Trump, some analysts say that Trump may be leaning toward him.
Regardless of whether the acquisition is made by Paramount or Netflix, anti-trust screening is unlikely to be avoided. Senator Elizabeth Warren of the Democratic Party said, “The merger of Paramount Skydance and Warner Bros. is a five-level anti-monopoly issue, and it is the very type that our anti-monopoly law seeks to prevent.” Warren then criticized, “The deal is backed by Trump aides, and it can bring about political collusion, preferential treatment and national security risks.” Netflix CEO Ted Sarandos said, “It’s not surprising at all,” expressing confidence in the deal and attacking, “We’re not going to cut jobs (like Paramount).”
In the stock market, Paramount rose 7.3 percent and Warner Bros. rose 5.3 percent, while Netflix fell 4 percent. Analysts say that the hostile takeover attempt by Paramount has made it less likely for Netflix to acquire Warner Bros.
“The competition to acquire Warner Bros is not over yet,” said Ross Benes, chief analyst at U.S. market research firm eMarketer. “Paramount will work to stop Netflix from all shareholders, regulators, and political circles, and the war could lead to a long-term war.”
SALLY LEE
US ASIA JOURNAL
