Things are getting hostile on the business front between rival movie studios! Paramount Pictures are reportedly considering a hostile takeover of Warner Bros. after today's announcement that Netflix had sealed the deal for $82.7 billion. This could spell doom for the Netflix acquisition if their plan works. This comes only a day after Paramount sent Warner Brothers CEO David Zaslav a letter full of complaints over what they deemed a "tilted and unfair process" that was "tainted by management conflicts.", according to CNBC.
Why Paramount are upset
Paramount, a Skydance Corporation offered to buy Warner Bros. for more than what Netflix offered. Paramount offered to buy the company outright at a $30-per share price point. Netflix offered a valuation of $27.75-per share for only part of the company, rather than its entirety. Warner Bros. accepted the lower offer by Netflix, and Paramount feels their offer was not adequately considered. The acquisition of Warner Brothers would be enough to dramatically elevate Paramount's position in the market compared to rivals Disney, Amazon and Netflix, so the stakes are significantly high for them.
Basically, Paramount think Warner Bros. and Netflix worked out a dirty deal, which could put them at a significant disadvantage in the entertainment market.
What a hostile takeover means
If Paramount follow through on a hostile takeover of the company, they would essentially go to Warner Bros. shareholders directly. If they could manage to convince shareholders that their offer is more favorable to them than Netflix’s offer, it could be enough to shift the tide in Paramount's favor.
Potential Regulatory Issues
Paramount also think the merger between Netflix and WB could result in stricter oversight which could lead the deal to potentially fall through during the legal side of the acquisition process. Paramount assert their acquisition would not be met with the same level of scrutiny.
Paramount and Netflix stocks fumble
In classic buy the rumor, sell the news fashion, both Paramount and Netflix's stock price fell by 8% and 3% respectively today while Warner Brothers' stock climbed 6%.
The battle between these entertainment giants doesn't seem to be over just yet. The consensus in Hollywood is fairly controversial regarding Netflix winning the bid for Warner Bros. and public sentiment seems to favor the possibility of Paramount acquiring WB over Netflix. Time will tell if Paramount can convince shareholders they're the better fit for the merger.
Which company would you rather see take over Warner Brothers? Let us know in the comments!
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