The Warner Deal Will Take a While

It’s perhaps worth saying that Paramount Skydance Corp.’s tender offer for Warner Bros. Discovery Inc. is not exactly a classic hostile tender offer. Warner has signed a merger agreement with Netflix Inc., in which Netflix would buy most of Warner for about $27.75 per share in cash and stock, leaving Warner’s shareholders with a bit of the company worth somewhere between $1 and $5 per share. That merger will take a long time to complete. For one thing, Warner’s shareholders have to vote on it, which means that Netflix and Warner need to put together a proxy statement and prospectus for the deal, file it with the US Securities and Exchange Commission and hold a shareholder vote; that could take months. For another, bigger thing, the US Department of Justice will need to review the deal for antitrust concerns; those concerns are significant, and Netflix and Warner have budgeted at least a year for that review.

That deal was announced last Friday, and on Monday Paramount jumped in with an all-cash $30-per-share offer to buy all of Warner, which we discussed on Monday. It took the offer directly to Warner’s shareholders: It launched a tender offer, scheduled to expire on Jan. 8, to buy those shares. The two deals operate on different timelines: Warner plans to ask its shareholders to vote on the Netflix deal, but that vote will happen long after Jan. 8, and if Paramount buys all the shares before the vote then the question is moot. If the shareholders all sell their shares to Paramount in January, they can’t vote on the Netflix deal in March. (And if 51% of the shareholders sell to Paramount, Paramount will control Warner, vote down the Netflix deal and acquire the company itself.)