"Warner Bros. called the Paramount bid 'illusory' in a presentation for shareholders today, saying the offer requires an 'extraordinary amount of debt financing' and other terms that make it less likely to be completed than a Netflix merger. It would be the largest leveraged buyout ever, 'with $87B of total pro forma gross debt,' and is 'effectively a one-sided option for PSKY [Paramount Skydance] as the offer can be terminated or amended by PSKY at any time,' Warner Bros. said."
"The Warner Bros. presentation touted Netflix's financial strength while saying that Paramount 'is a $14B market cap company with a 'junk' credit rating, negative free cash flows, significant fixed financial obligations, and a high degree of dependency on its linear business.' The Paramount 'offer is illusory as it cannot be completed before it is currently scheduled to expire,' Warner Bros. said."
"Warner Bros. said in a letter to shareholders today that it prefers Netflix with its 'market capitalization of approximately $400 billion, an investment grade balance sheet, an A/A3 credit rating and estimated free cash flow of more than $12 billion for 2026.' Moreover, the deal with Netflix provides Warner Bros. with 'more flexibility to operate in a normal course until closing,' the letter said."
Warner Bros. Discovery's board unanimously rejected Paramount's $108.4 billion hostile takeover offer and urged shareholders to refuse the bid. The board continues to support Netflix's pending $82.7 billion purchase of Warner's streaming and movie studios businesses with a separate spinoff of its cable TV division. Warner described the Paramount proposal as illusory, citing an extraordinary need for debt financing, $87 billion of pro forma gross debt and one-sided termination rights for Paramount Skydance. Warner emphasized Netflix's stronger financial profile, larger market capitalization, investment-grade balance sheet, A/A3 credit rating and projected free cash flow, plus greater operational flexibility until closing.
Read at Ars Technica
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