Paramount revises Warner takeover terms amid Netflix deal

Paramount Skydance has revised its unsolicited $30-per-share offer to acquire Warner Bros Discovery (WBD), adding financial incentives as it seeks greater shareholder backing.

The company said it would introduce a 'ticking fee' of 25 cents per share for every quarter after 31 December that the deal fails to close. This would amount to roughly $650m per quarter. Paramount has also offered to fund the proposed $2.8bn breakup fee that WBD would owe Netflix if it were to terminate its existing merger agreement.

The overall offer value remains unchanged at $30 per share in cash. Paramount is seeking to acquire WBD for $77.9bn, with an enterprise value of approximately $108bn including debt. The tender offer deadline has been extended to 2 March, marking the third extension so far.

Paramount CEO David Ellison said that the 'additional benefits' announced Tuesday 'clearly underscore our strong and unwavering commitment to delivering the full value WBD shareholders deserve for their investment.'

However, shareholder support appears limited. As of Monday, more than 42.3 million Warner shares had been validly tendered and not withdrawn, down from over 168.5 million shares on 21 January. Warner Bros Discovery has approximately 2.48 billion shares outstanding, meaning Paramount would need more than 50% to gain control.

Warner confirmed it had received Paramount’s amended offer and said its board would review it, but stated it was not changing its recommendation in favour of the Netflix transaction at this stage.

In December, Netflix agreed to acquire Warner’s studio and streaming business for $72bn in cash, valuing the deal at roughly $83bn including debt, or $27.75 per share. Under that agreement, Warner’s networks business would be spun off into a separate public company.

Paramount has argued its bid is superior, citing what it describes as variability in the effective per-share value of the Netflix transaction, depending on debt adjustments linked to the planned spin-off.

Both proposed deals are under regulatory scrutiny. The US Department of Justice has initiated reviews of the Netflix agreement and Paramount’s bid. Paramount said it has secured clearance for its tender offer from German authorities. Lawmakers and industry groups have also raised concerns about consolidation and potential job losses.