Warner Bros. Discovery (WBD) recently announced that its board of directors has unanimously determined that the tender offer launched by Paramount Skydance (PSKY) on 8 December 2025 is not in the best interests of WBD and its shareholders. Also, it does not meet the criteria of a ‘Superior Proposal’ under the terms of WBD’s merger agreement with Netflix announced on 5 December 2025.
The Warner Bros. Discovery board unanimously reiterates its recommendation in support of the Netflix combination and recommends that WBD shareholders reject PSKY’s offer.
“Following a careful evaluation of Paramount’s recently launched tender offer, the board concluded that the offer’s value is inadequate, with significant risks and costs imposed on our shareholders,” said WBD board of directors chair Samuel A. Di Piazza, Jr. “This offer once again fails to address key concerns that we have consistently communicated to Paramount throughout our extensive engagement and review of their six previous proposals. We are confident that our merger with Netflix represents superior, more certain value for our shareholders and we look forward to delivering on the compelling benefits of our combination.”
In connection with its determination, today the board sent a letter to shareholders providing detail on its recommendation to shareholders. Here are the main points, summarised from WBD’s letter:
- The board of WBD has unanimously urged shareholders to reject the tender offer from PSKY and support the company’s merger with Netflix, following a fresh review of competing proposals.
- The board also said its months-long strategic review, supported by independent financial and legal advisors, concluded that the Netflix deal delivers significantly higher and more certain value than any PSKY proposal received to date.
- Under the Netflix merger, WBD shareholders will receive $23.25 in cash per share, $4.50 in Netflix stock, plus additional upside through Discovery Global shares and future value post-separation.
- Moving ahead, they described the Netflix agreement as fully financed, binding, and backed by Netflix’s investment-grade balance sheet and market capitalisation exceeding $400 billion.
- In contrast, the PSKY offer was labelled “inferior,” “illusory,” and high-risk, relying on an opaque and revocable trust rather than a firm equity backstop from the Ellison family.
- The board said PSKY has repeatedly misrepresented having a “full backstop,” noting there is no direct or unconditional Ellison family commitment behind the offer.
- Concerns were raised over PSKY’s proposed financing, including high leverage, limited free cash flow, reliance on speculative $9 billion synergy targets, and exposure to market or business shocks before deal closure.
- The board highlighted that PSKY’s tender offer is not a binding merger agreement and can be amended or withdrawn at any time, offering shareholders little deal certainty.
- Regulatory risk was assessed as broadly similar for both transactions, with Netflix agreeing to a larger $5.8 billion regulatory termination fee versus PSKY’s $5 billion.
- Accepting the PSKY offer could also saddle WBD shareholders with up to $4.3 billion in additional termination and financing costs, equating to roughly $1.66 per share, if the deal fails.
- The board reaffirmed that its review process was transparent, competitive, and fair, involving extensive engagement with PSKY, which never submitted a superior proposal.
- Concluding the letter, the board said the Netflix merger represents the most compelling, certain, and value-creating path forward for shareholders and encouraged investors to review the detailed 14D-9 filing with the SEC.
The basis for the board’s decision is set forth in the Solicitation/Recommendation Statement on Schedule 14D-9 (the “Schedule 14D-9”) filed yesterday with the U.S. Securities and Exchange Commission. Allen & Company, J.P. Morgan and Evercore are serving as financial advisors to WBD and Wachtell Lipton, Rosen & Katz and Debevoise & Plimpton LLP are serving as legal counsel.
