Paramount has enhanced its offer for Warner Bros. Discovery, not formally moving above its $30 a share all cash bid but is moving in with a new $0.25 a share so-called “ticking fee” payable to WBD shareholders for each quarter its transaction has not closed beyond December 31, 2026.
Par said the move is equivalent to approximately $650 million cash value each quarter and underscores “Paramount’s confidence in the speed and certainty of regulatory approval for its transaction.”
Paramount also agreed to fund a $2.8 billion termination fee payable to Netflix and said it is offering solutions to WBD’s debt financing costs and obligations.
Warner Bros. Discovery has agreed to a sell its Warner Bros. studios and streaming assets to Netflix and advised shareholders several times to reject a hostile takeover offer from the David Ellison company, which is looking to acquire all of WBD. There’s a full out PR battle raging as executives of all three companies court content creators and Warner shareholders as well as regulators on both sides the Atlantic. The giant streamer late last month upgraded its offer of $27.75 a share from cash-and-stock to all cash.
WBD has yet to set a date for a special meeting in April where shareholders will vote on the Netflix deal. It’s been urging holder to cast a yes vote. Paramount has been aggressively lobbying for them to vote no and meanwhile tender their WBD shares to Paramount.
Paramount is looking to ramp up the pressure with its announcement today. The $2.8 billion termination fee that would be due to Netflix if WBD switches sides has been an objection raised by the Warner board.
Paramount also said it will eliminate WBD’s potential $1.5 billion financing cost associated with its debt exchange offer by fully backstopping an exchange offer that relieves WBD of its contractual bondholder obligations. Paramount will fully reimburse WBD’s shareholders for the $1.5 billion fee, without reduction to the separate $5.8 billion
reverse termination fee. That’s the amount Paramount agreed to pay if its acquisition fails to close.
If WBD’s financing sources will not extend the maturity of WBD’s existing $15 billion
bridge loan, Paramount said itsdebt financing sources are fully prepared to do so, with any incremental costs covered by Paramount. Alternatively, Paramount will permit WBD “to structure permanent financing in any way it chooses so long as the debt is redeemable at a commercially reasonable cost.”
Paramount said it will provide WBD flexibility between signing and closing, including by matching any comparable Netflix interim operating covenants.
To provide WBD shareholders further certainty of closing, Paramount said it “is open to discussing with the WBD Board of Directors contractual solutions to account for the possibility of continuing deteriorating financial performance beyond what WBD is currently projecting for its linear network business.”
Paramount’s amended offer is fully financed by an increased $43.6 billion of equity commitments from the Ellison Family and RedBird Capital Partners and $54 billion of debt commitments from Bank of America, Citigroup and Apollo.
Paramount’s financing includes an irrevocable personal guarantee from Larry Ellison of $43.3 billion covering the equity financing as well any damages claims against Paramount.
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More to come
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