Major WBD Shareholder Calls Amended Paramount Bid ‘Not Sufficient’

Paramount has submitted its latest offer in its quest to own Warner Bros. Discovery, but one of WBD’s major investors isn’t having it.

A representative for Harris Associates, Warner Bros.’ fifth-largest shareholder, warned against the latest bid from David Ellison’s Paramount, saying that it still did not represent the best possible deal on the pending WBD transaction. Harris, as of the end of September, owns about 4% of WBD shares with 96 million shares in total.

“The changes in Paramount’s new offer were necessary, but not sufficient,” Harris Oakmark portfolio manager and Director of U.S. Research Alex Fitch told Reuters on Tuesday. “We see the two deals as a toss-up, and there is a cost to changing paths. If Paramount is serious about winning, they’re going to need to provide a greater incentive.”

On Monday, David Ellison came back to the bargaining table with a revised offer that includes a personal guarantee by father Larry Ellison, the billionaire co-founder of Oracle and second-richest man in the world. The new terms also include an agreement by Paramount to not revoke David’s trust, more flexible financial terms and a higher $5.8 billion break-up fee that matches Netflix’s offer.

“We expect the board of directors of WBD to take the necessary steps to secure this value-enhancing transaction and preserve and strengthen an iconic Hollywood treasure for the future,” David Ellison said.

It’s the kind of amendment that top shareholders at WBD seemed open to. As recently as Dec. 18, Fitch had told Reuters that he and other shareholders were willing to hear out a revised Paramount bid as things heated up in the race for WBD ownership. At the time, Fitch noted that Netflix’s $82.7 billion deal for WB’s studio and streaming assets is “superior on deal terms” but “comparable on value” with Paramount’s offer for the entire company.

“The good news is that the concerns on deal terms seem entirely addressable,” Fitch added at the time. “If Paramount decides to come forward with superior financial consideration and properly addresses the issues with deal terms, we would be very open to a revised Paramount offer. The ball is in their court.”

The revisions, it seems, were still not good enough for Fitch, who has suggested that an even better offer is yet possible from Paramount. Only time will tell if Paramount can make such an offer in a fast-changing situation — one where Netflix executives are embarking on a studio tour for the cameras while Paramount is lodged in yet another “60 Minutes” quagmire.

“The updated offer from Paramount doesn’t change the fact that WBD’s executives prefer Netflix,” said Ross Benes, an analyst for eMarketer. “The new offer does make Paramount’s case more compelling to the board and shareholders. But WBD executives will keep fighting to maintain the Netflix deal as long as they can. This battle will be prolonged.”

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