Warner Bros. Bidders Brace for a Fight That Will Last Months

Описание: Robert Fishman, Moffettnathanson Senior Analyst, discusses the bidding war for Warner Bros. Discovery and how long it may take for a deal to receive regulatory approval.

Paramount Skydance Corp. and Netflix Inc. — the entertainment heavyweights locked in a bidding war for Warner Bros. Discovery Inc. — are girding for a battle they predict will stretch well into 2026.
Warner Bros. was given 10 business days to respond to Paramount’s hostile $30-a-share bid for the company on Monday. Since that offer was already rejected once, the Warner Bros. board isn’t planning to cancel the merger agreement signed last week with Netflix, according to people familiar with the company’s thinking. Doing so would require Warner Bros. to pay Netflix a $2.8 billion termination fee.
That puts the onus on Paramount to make the next move in what everyone expects to be a drawn-out affair lasting months. Paramount can follow through on its tender offer to buy Warner Bros. shares from investors at $30 each on Jan. 8. It can also extend the bid, sue to stop the Netflix deal or increase the terms.
Does the purchase price “move up another $5 or $10 billion? I think it probably does,” Kevin Mayer, the former top dealmaker at Walt Disney Co., said at the UBS media conference on Tuesday. “Going directly to shareholders with the same deal that the board rejected probably doesn’t win it.”
Shareholders of Warner Bros., one of Hollywood’s biggest film and TV companies, are hoping for a bidding war that further boosts the price of the deal. Paramount’s bid values the parent of HBO at $108.4 billion, including debt. Netflix is offering a mix of cash and stock for the Warner Bros. studios, streaming and HBO businesses. 
Both companies have communicated that they have the ability to increase their offers, according to the people, who asked not to be identified discussing private deliberations.
Before taking any next steps, Paramount will have to gauge how much support it has from Warner Bros. investors. Chief Executive Officer David Ellison has been making the rounds in Washington and on Wall Street to win backing for his offer. Some investors, including Mario Gabelli, have voiced support for Paramount — at least for now. 
“My gut tells me we haven’t seen the seventh round yet,” Gabelli said in an interview.
Institutional investors, hedge funds and others will be doing their analysis of the two proposals. Big investors typically make their decisions a few days before the expiration of a tender offer.
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