Pentwater Capital Management, the seventh largest shareholder in Warner Bros Discovery, sent a letter to the board on Monday. The letter says the board has not fully engaged with Paramount’s revised $108.4 billion offer for the whole company. Matt Halbower, Pentwater’s CEO, told CNBC that the offer is economically superior to Netflix’s $83 billion deal for Warner’s streaming and studio assets.
Halbower explained that the Paramount offer lowers regulatory risk. He added that the board should not refuse a conversation with a party that can close the transaction. He said Paramount has indicated that its $30 billion offer is not final and that the company may be willing to pay more.
Board Concerns Over Regulatory Risk
WBD board chairman Samuel Di Piazza Jr. replied on a separate CNBC interview. He noted that Paramount’s bid adds $2.8 billion in costs if the company abandons the Netflix deal. He also warned that the $55 billion debt financing in the Paramount offer raises the chance of a failed closing.
Di Piazza said the media sector is under stress and asked whether Paramount would walk away if market conditions shift over the next 18 months. He concluded that Netflix remains the superior offer because it provides a clear path to closing and protects shareholders.
Netflix Offer Remains Strong
Halbower pushed back, calling the board’s argument specious. He pointed out that Netflix would add $59 billion of debt to the deal. He argued that the Ellison family holds an AAA credit rating, higher than Netflix’s rating. He said the Ellisons and their Middle East partners would bring over $41 billion of equity to the transaction.
Halbower said the risk of banks refusing to finance the debt is low because the equity cushion is large. He warned that the board should listen to shareholders, especially a voice as large as Pentwater’s.
Shareholder Voting Timeline
Shareholders will vote on the Netflix‑Warner deal in late spring or early summer. Meanwhile, Paramount gave WBD shareholders until Jan. 21 at 5 p.m. ET to tender their shares. As of Dec. 19, fewer than 400,000 shares were tendered and not withdrawn.
Without board approval, Paramount needs at least 90% of WBD’s outstanding shares to succeed. WBD has about 2.48 billion shares outstanding. Halbower reminded investors that they can vote for the board and for the deal they prefer.
He said Pentwater will keep pressing the board to consider the Paramount offer seriously. He believes the board should not reject a deal that could add value for shareholders.
Source: The Wrap
