- Paramount Skydance is still trying to disrupt Warner Bros. Discovery's deal with Netflix.
- Although David Ellison's company has been rejected eight times, it still has options.
- Here are the four most likely endings in the competition for WBD.
The war for Warner Bros. Discovery is getting intense.
Paramount Skydance isn't surrendering in its quest to buy WBD, even though its offers have been rejected eight times in favor of Netflix's bid.
Paramount CEO David Ellison has criticized WBD for not selecting what he's called "by far the superior offer."
WBD has fired back, accusing Paramount of threatening lawsuits and leaking to the press. The company's board of directors said this week in a letter to shareholders that Paramount "has repeatedly failed to submit the best proposal for WBD shareholders despite clear direction."
There have been many twists and turns in Netflix and Paramount's battle for WBD, and the drama isn't over yet.
Below are the four most likely scenarios that could unfold.
1. Paramount offers more money for WBD
Although Paramount says its all-cash, $30-per-share offer for all of WBD provides more value and less risk than Netflix's $27.75-per-share bid for WBD's studio and streaming assets, the company could up the ante.
Several media insiders, including Disney's former top dealmaker, expect a renewed bidding war for WBD.
Their view got a boost when Paramount disclosed in a filing that Ellison had texted WBD CEO David Zaslav, saying that Paramount's $30-per-share proposal wasn't its "best and final" offer.
WBD investors also seem to be counting on more fireworks, given that its stock is trading north of $28.50, close to $1 per share above Netflix's agreed-upon purchase price. That suggests shareholders believe either Ellison and company or Netflix will fork over more money before WBD changes hands.
2. WBD shareholders pick Paramount's hostile bid
Paramount might not need to offer another penny if a majority of WBD's shareholders tender their shares, which would put pressure on the board to reconsider its proposal.
As a public company, WBD's leadership is legally required to act in the best interests of its shareholders. Otherwise, its board could be sued. So, if WBD's investors overwhelmingly prefer Paramount's bid, the board could have no choice but to go with it.
However, Rich Greenfield, a media analyst at Lightshed Partners, thinks Paramount won't convince a majority of WBD shareholders to tender their shares. Greenfield predicted that Paramount would then raise its offer to $32 per share, but that Netflix would respond by sweetening its offer, leading to Paramount eventually dropping its bid.
Until the Netflix deal closes, a competing proposal could come in, since WBD is a public company. Comcast drove up the eventual price of Disney's acquisition of Fox's studio by nearly $20 billion, even though its rival bid came in six months later.
3. Paramount or WBD shareholders sue the board
If Paramount remains adamant that it has a superior proposal that wasn't chosen, it could sue WBD's board of directors, alleging negligence.
WBD has acknowledged that possibility. Paramount "has been aggressive in its engagement with WBD, has retained litigation counsel and has threatened litigation," WBD's board of directors wrote in a letter on Wednesday in which it rejected Paramount's latest offer.
Lawyer Raul Gastesi of Gastesi Lopez Mestre & Cobiella has taken note of Paramount's litigious posture and said that now that it has been turned down, "it is likely to attempt to seek legal remedy such as a shareholder derivative suit or potentially a direct lawsuit."
However, Reuben Miller, the head of antitrust at data intelligence firm Dealreporter, said that while Paramount is making waves in the court of public opinion, he believes they "would rather come with an increased offer and avoid litigation than roll the dice in Delaware court."
Even if Paramount decides not to sue, there's a chance WBD shareholders could take legal action against WBD's board.
4. Paramount holds the current offer and loses to Netflix
While Paramount has taken a hands-on approach to its WBD bid so far, it could let the chips fall and move on if its proposal doesn't win over enough WBD shareholders.
Instead of spending more than $100 billion on WBD, Paramount could put money toward another acquisition, or simply invest in improving its technology and original content.
