Paramount Skydance sues Warner Bros over Netflix deal

Paramount Skydance is taking legal action against Warner Bros. Discovery after the latter rejected the company’s hostile takeover bid in favor of sticking with Netflix.

In a lawsuit filed in the Delaware Chancery Court, Paramount Skydance is requesting that Warner Bros. provide information about its sale process and pending multi-billion-dollar deal with rival Netflix.

“WBD has failed to include any disclosure about how it valued the Global Networks stub equity, how it valued the overall Netflix transaction, how the purchase price reduction for debt works in the Netflix transaction, or even what the basis is for its ‘risk adjustment’ of our $30 per share all-cash offer,” Paramount Skydance CEO David Ellison said Monday in a company-wide letter.

“We filed suit this morning in Delaware Chancery Court to ask the court to simply direct WBD to provide this information so that WBD shareholders have what they need to be able to make an informed decision as to whether to tender their shares into our offer.”

The lawsuit comes just days after WBD advised its shareholders to again rebuff Paramount Skydance’s amended offer and instead back a competing offer from Netflix.

Last month, WBD agreed to sell its studio and streaming operations to Netflix in a lucrative $82.7 billion deal. The stunning agreement came after Paramount Skydance had initially offered to acquire the entire company, which includes prominent networks such as CNN and Discovery, beyond just the studio and streaming divisions.

Within days of WBD’s agreement with Netflix, Paramount Skydance went public with its hostile takeover bid of $77 billion. Even as it later enhanced its offer to all-cash $30 per share, WBD continued to urge its shareholders to remain steadfast in accepting Netflix’s competing offer.

“WBD has provided increasingly novel reasons for avoiding a transaction with Paramount, but what it has never said, because it cannot, is that the Netflix transaction is financially superior to our actual offer,” Ellison continued in the letter.

“We are struck that there were few actual board meetings in the period leading up to the decision to accept an inferior transaction with Netflix. And we are surprised by the lack of transparency on WBD’s part regarding basic financial matters. It just doesn’t add up — much like the math on how WBD continues to favor taking less than our $30 per share all-cash offer for its shareholders,” he added.

“The best outcome for you and for us would be if WBD’s Board would exercise the right it has under the Netflix Agreement to engage with Paramount. If it does so, we will be open and constructive to secure the best path forward for WBD and each of you.”