Will “Engage In Good Faith” With Warner Bros.

Paramount has responded to Warner Bros. Discovery, which, with the backing of Netflix, will start seven days of talks through Feb. 23 with the David Ellison company on a potential deal.

“Paramount acknowledges the announcement from Warner Bros. Discovery that, acting with Netflix, they have decided to provide Paramount a 7-day ‘waiver’ for negotiation. In doing so, the WBD Board has chosen to avoid making the customary determination under the Netflix merger agreement that Paramount’s superior $30 per share all-cash offer ‘could reasonably be expected to result in’ a superior proposal, which would have given it an unfettered right to negotiate without a time deadline.”

WBD, in fact, is not convinced that the Paramount talks could yield an agreement superior to its deal with Netflix. It continues to recommend in favor of the giant streamer, setting a special shareholder meeting March 20 to vote on the Netflix merger. Paramount’s statement, which was rather restrained, did draw particular attention to Warner proxy materials which stating that the consideration Netflix is offering WBD shareholders “will be a minimum of $21.23 to a maximum of $27.75” a share in cash. Warner had called the lower number “a hypothetical scenario … which is highly unlikely to occur.”

“By contrast, Paramount already offers a higher value of $30 per share, all-cash and a more expeditious and certain path to closing a transaction, including with the previously disclosed addition of a $0.25 per-share, per-quarter ticking fee,” Par said. It did not refer in its statement to the possibility of raising its base offer beyond the $30, although that had been suggested.

“Although the [WBD] Board’s actions are unusual, Paramount is nonetheless prepared to engage in good faith and constructive discussions. At the same time, we will continue to advance our tender offer, maintain our solicitation in opposition to the inferior Netflix merger, and proceed with our intention to nominate a slate of directors at the upcoming WBD annual meeting.”