Paramount Skydance has intensified its attempts to take over Warner Bros. Discovery (WBD) by launching a lawsuit in the Delaware Chancery Court. The legal action seeks to contest WBD's existing deal with Netflix, which involves selling its streaming and movie arms for $82.7 billion. This agreement would also involve the creation of a separate company, Discovery Global, comprising WBDâs cable networks.
In response, Paramount submitted a hostile takeover bid and later revised this offer to $108.4 billion, arguing it is superior. Paramountâs strategy includes actively trying to woo WBDâs shareholders to its offer by presenting its all-cash proposal, valued at $30 per share compared to Netflixâs $27.72 per share offer.
Paramount CEO David Ellison reached out to WBD shareholders through a letter, revealing the filing of the lawsuit. The legal move demands that WBD clarify how it valued different deal components, including its Global Networks equity and the terms of the Netflix transaction. Paramount believes that greater transparency might sway shareholders to its side before the January 21 deadline.
Prior to the Netflix deal, Paramount openly questioned the transparency and fairness of WBDâs bidding process. The company maintains that its propositions were not properly addressed or negotiated.
Ellisonâs letter expressed his confusion over the lack of response to their offer, stating: âWe 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... the lack of transparency on WBDâs part regarding basic financial matters... just doesnât add up.â
In a further move to derail the Netflix agreement, Paramount plans to nominate board members at WBD's upcoming shareholder meeting to oppose the deal. The nomination window is set to open in three weeks, according to Ellison's correspondence.