Warner Bros poised to rebuff Paramount's $108bn offer - report

(Sharecast News) - Warner Bros Discovery is reportedly set to rebuff a hostile $108bn bid from rival Paramount, questioning its ability to finance the deal, while in a separate twist a key backer of the offer pulled out. Paramount went directly to shareholders last week with its all-cash, $30-per-share takeover offer, after losing out to Netflix's $83bn proposal in an auction for the studio and streaming company, the Financial Times reported, citing unnamed sources.

WBD is expected to outline four central criticisms of Paramount's offer, which argues that its value, financing and terms are deficient compared with Netflix's deal agreed earlier this month.

The filing from WBD was pending final approval from its board of directors, people familiar with the matter said, and the timing could still slip. WBD's share price was trading at about $29 a share on Tuesday, suggesting that investors were expecting Paramount to sweeten its bid.

Meanwhile, investment firm Affinity Partners - founded by Jared Kushner, son-in-law of US President Donald Trump - which had been backing the Paramount offer, pulled out.

"With two strong competitors vying to secure the future of this unique American asset, Affinity has decided no longer to pursue the opportunity," Affinity said.

"The dynamics of the investment have changed significantly since we initially became involved in October. We continue to believe there is a strong strategic rationale for Paramount's offer."

Netflix's offer is worth $23.25 in cash and $4.50 in stock per share. It does not include the remaining television assets, including CNN, which WBD has been valuing between $3 and $5 a share.

David Ellison, Paramount's chief executive and son of Oracle chief Larry Ellison, has also said the Netflix bid was likely to face more regulatory scrutiny than the Paramount approach, meaning there is greater risk the deal will not close.

WBD's board is poised to reject such claims, the report FT stated, arguing that Paramount's bid is less certain as it is backed by the Ellison family trust, which is worth close to $250bn in Oracle stock, rather than personally by Larry Ellison, who is among America's richest people.

Netflix has offered a $5.8bn termination fee, a high amount for M&A transactions, a sign it is confident it can get all the regulatory approvals.

A person close to Paramount also told the newspaper Kushner's exit from the offer was meant to smooth over the bid's path with WBD's board and strip out the "noise" about his ties to Trump, who has threatened to get involved in scrutiny of the bid.

Reporting by Frank Prenesti for Sharecast.com