Paramount sued Warner Bros Discovery on Monday in the Delaware Court of Chancery, seeking detailed disclosures on the board’s financial analysis backing a rival $82.7-billion deal with Netflix. The lawsuit marks Paramount’s sharpest move yet to block the Netflix pact and push its own $108.7-billion all-cash offer.
Led by CEO David Ellison, Paramount argued its $30-per-share all-cash proposal for the entire company, surpassing Netflix’s $27.75-per-share cash-and-stock offer covering studios and streaming assets. The company says cash certainty and cleaner regulatory clearance make its bid superior.
Paramount will nominate directors to Warner Bros’ board and propose a bylaw change requiring shareholder approval for any separation of the cable TV business, a cornerstone of the Netflix deal. Its amended offer includes $40 billion in equity, personally guaranteed by Larry Ellison, with $54 billion in debt.
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Warner Bros rejected Paramount’s latest proposal last week, urging shareholders to back the Netflix transaction. The company said it would owe Netflix a $2.8-billion termination fee if it walks away, part of $4.7 billion in breakup costs. On Monday, Warner Bros called the lawsuit ‘meritless,’ noting that Paramount has not raised its price or fixed ‘obvious deficiencies.’
Craig Huber of Huber Research Partners dismissed the lawsuit’s impact, saying court battles take time. “If they want Warner Bros bad enough, raise the bid. Money talks,” he said.
Paramount wants disclosures before its tender offer expires on January 21, arguing investors need full information to decide whether to tender shares or wait. Warner Bros shares fell 1.6% on Monday; Netflix stayed flat; Paramount rose 0.4%.