BofA, Citi to Finance Paramount's $108B Hostile Bid for Warner Bros.
Banking giants commit to a $54 billion debt package, facing significant syndication risk in a blockbuster media M&A showdown that sent WBD shares soaring.
In a dramatic move set to reshape the global media landscape, Paramount has launched a hostile, all-cash tender offer to acquire Warner Bros. Discovery for $108.4 billion. The bold bid is underpinned by a massive $54 billion debt financing package co-led by Bank of America and Citigroup, signaling a major payday for the banking giants but also saddling them with considerable risk.
The offer, formally announced by Paramount, proposes to acquire all outstanding shares of Warner Bros. Discovery (WBD) for $30 per share. The move challenges a potential rival offer from Netflix and sets the stage for a high-stakes battle for control of one of Hollywood's most storied libraries.
Shares of Warner Bros. Discovery jumped 6.7% to $29.98 in the wake of the news, trading just shy of the offer price and indicating investor expectation that a deal could materialize. Paramount's own shares rose over 9%, while shares of streaming competitor Netflix, now potentially drawn into a bidding war, declined more than 4%.
At the heart of the transaction is the gargantuan debt commitment from Bank of America and Citigroup, with participation from Apollo Global Management. The $54 billion bridge loan represents one of the largest M&A financing deals of the year, promising substantial fees for the underwriters. However, it also introduces significant syndication risk. In a hostile takeover, where the target company is unwilling, banks can find it more difficult to sell portions of the debt to other investors, potentially leaving them exposed with billions on their balance sheets if the market sours.
Bank of America, with a market capitalization of over $408 billion, saw its shares rise 1.06% to $55.14 following the news. Citigroup, valued at roughly $206 billion, ticked up marginally by 0.05% to $111.80, as investors weighed the lucrative fees against the inherent risks of the complex deal.
The strategic rationale for Paramount, whose bid is also backed by equity from the Ellison family and RedBird Capital, is clear: consolidation to compete. A combined Paramount-Warner Bros. entity would create a media behemoth with a vast content library, including franchises like Mission: Impossible and DC Comics, better positioning it to challenge streaming titans Netflix and Disney in the escalating content wars.
The unsolicited offer now forces the board of Warner Bros. Discovery to respond. The company, which has its own significant debt load following its merger with Discovery, must now weigh Paramount's aggressive cash offer against its standalone strategy or a potential alternative transaction with Netflix or another suitor. The deal would undoubtedly face intense regulatory scrutiny from antitrust authorities in Washington, adding another layer of uncertainty to the blockbuster proposal.