Warner Bros. Rejects Paramount's $108B Bid, Backs Netflix Deal
Shares fall as the board deems the $30-per-share hostile offer 'inferior,' signaling its preference for a strategic asset sale to streaming giant Netflix.
Warner Bros. Discovery has formally rejected a hostile takeover bid from rival Paramount Global, a bold move that spurns a premium offer in favor of the company's own strategic plan centered on a major asset sale to Netflix.
The board of the media conglomerate, owner of brands like HBO, CNN, and Warner Bros. film studio, announced Tuesday it would not engage with Paramount's unsolicited all-cash offer of $108.4 billion, which valued the company at approximately $30 per share. In a statement, the board labeled the bid "inferior" and expressed confidence in a previously negotiated deal with Netflix.
Investors reacted with skepticism, sending WBD shares down 2.7% to close at $28.90 in Tuesday trading. The drop suggests shareholder disappointment that the board is walking away from the premium cash offer, with the stock now trading below the proposed acquisition price.
This high-stakes decision places Warner Bros. Discovery at the center of the media industry’s frantic consolidation. The company is now navigating between two vastly different futures: a full sale to a legacy competitor or a significant realignment through the sale of its core entertainment assets. The competing proposals come after WBD initiated a strategic review in November to explore its options, including a potential sale, following unsolicited acquisition interest, as reported by Bloomberg.
Paramount's hostile bid was an aggressive, direct-to-shareholders approach meant to force a combination of the two storied media giants. The all-cash tender offer was formally announced by Paramount as a way to build scale to compete in the punishing streaming wars.
However, WBD's board is backing a different path. It plans to proceed with an existing agreement to sell its streaming and studio assets to Netflix for $82.7 billion. In its rejection of the Paramount bid, the board indicated its belief that this strategic divestiture offers superior and more certain long-term value to shareholders. While the headline number from Paramount is higher, sources close to the board pointed to concerns over the financing and complex terms of the hostile offer.
The decision effectively snubs the offer from Paramount, a key competitor. Warner Bros.' board urged investors to reject what it sees as an inadequate proposal, setting the stage for a potential proxy battle if Paramount decides to press its case.
With a market capitalization of approximately $73.6 billion, WBD has been a focal point of M&A speculation for the past year. Even with Tuesday's decline, the company's stock is trading near its 52-week high and well above the average analyst price target of $25.90, largely driven by takeover chatter. The current market price, sitting below Paramount's offer, signals Wall Street’s doubt that the $30-per-share bid will materialize now that WBD's board has firmly rebuffed it.
The ball is now in Paramount's court. The company could abandon its pursuit, raise its offer to win over shareholders, or attempt to challenge WBD's board directly. For Warner Bros. Discovery, the path forward involves executing the complex asset sale to Netflix, a transformative deal that would reshape the company and the broader streaming landscape.