LOS ANGELES and NEW YORK—In a notable escalation in the takeover battle for Warner Bros. Discovery, Paramount Skydance has sent a letter to WBD shareholders announcing that it is suing the WBD and that launching a proxy battle as part of its efforts to block a deal to sell some assets to Netflix and acquire all of WBD.
In the letter, David Ellison, chairman and CEO of Paramount Skydance said it intends to nominate directors for election at the WBD 2026 Annual Meeting and solicit against the approval of the Netflix transaction. The letter also said that it has filed suit in Delaware Chancery Court seeking disclosure of basic information to enable WBD shareholders to make an "informed decision" on the proposed deal with Netflix.
In December, Netflix struck a deal with WBD to acquire certain assets, including HBO and the Warner Bros. film and TV studios, for $82.7 billion. Paramount Skydance countered with a hostile takeover bid offer to acquire all of the outstanding shares of Warner Bros. Discovery for $30 per share in cash, or about $108.4 billion. After this was rejected by the WBD board, Paramount issued a revised offer on Dec. 22, which was also rejected.
In terms of the lawsuit, the Paramount Skydance letter to WBD shareholders said they asked “for the customary financial disclosure a board is supposed to provide shareholders when making an investment recommendation. But in each of its 14D-9 filings, WBD has failed to include any disclosure about how it valued the Global Networks stub equity, how it valued the overall Netflix transaction, how the purchase price reduction for debt works in the Netflix transaction, or even what the basis is for its "risk adjustment" of our $30 per share all-cash offer.”
To get that information, Paramount filed suit on Jan. 12 “to ask the court to simply direct WBD to provide this information so that WBD shareholders have what they need to be able to make an informed decision as to whether to tender their shares into our offer.”
“We do not undertake any of these actions lightly,” Ellison wrote in the letter to WBD shareholders. “Make no mistake, our goal remains to have constructive discussions with WBD's Board to reach an agreement that is in the best interests of WBD shareholders. Our objective from the moment we approached WBD was for a collaborative negotiation and a successful transaction that would be a win for both companies, both shareholder groups and all stakeholders. We remain perplexed that WBD never responded to our December 4th offer, never attempted to clarify or negotiate any of the terms in that proposal, nor traded markups of contracts with us. Even as we read WBD's own narrative of its process, we are struck that there were few actual board meetings in the period leading up to the decision to accept an inferior transaction with Netflix. And we are surprised by the lack of transparency on WBD's part regarding basic financial matters. It just doesn't add up – much like the math on how WBD continues to favor taking less than our $30 per share all-cash offer for its shareholders.”
“I believe in our vision for how we can bring these great companies together and deliver for consumers, the creative community and of course, for you,” Ellison concluded. “Paramount is committed, my family is committed, and hopefully this helps answer the question of what comes next.”
