NFLX Stock In Spotlight As WBD Board Warns Paramount–Skydance Offer Carries ‘Significant Risks’

• The WBD board also called Paramount’s offer “illusory,” adding that it cannot be completed before its current expiration date.
• It also said that Paramount’s offer is “effectively a one-sided” option for the David Ellison-led company, as it can be terminated or amended at any time by PSKY.
• Following the release of the letter to shareholders, Netflix voiced support for WBD's board, stating that it welcomes their commitment.

Warner Bros. Discovery Inc.’s (WBD) board of directors on Wednesday stated that Paramount Skydance Corp.’s (PSKY) offer comes with “significant risks.”

In a letter to shareholders urging them not to vote in favor of Paramount’s offer, WBD’s board said that the Netflix Inc. (NFLX) merger is more favorable.

“PSKY’s offer has significant risks and is inferior to the Netflix merger on a risk-adjusted basis,” the board said.

Warner Bros. Discovery shares declined 0.8% in Wednesday’s pre-market trade, while Paramount Skydance shares edged lower by 0.2%. Retail sentiment on Stocktwits around both companies trended in the ‘bearish’ territory.

Netflix shares were up nearly 0.3% at the time of writing, with retail sentiment trending in the ‘neutral’ territory on Stocktwits.

Warner Calls Paramount’s Offer ‘Illusory’

WBD board also called Paramount’s offer “illusory,” adding that it cannot be completed before its current expiration date. It also said that Paramount’s offer is “effectively a one-sided” option for the David Ellison-led company, as it can be terminated or amended at any time by PSKY.

Warner also warned shareholders that they will not receive cash for 12 to 18 months after they tender their shares in case Paramount’s offer is accepted. Moreover, the company also noted that shareholders will not be able to trade their shares after tendering them.

WBD also cautioned that if the Paramount offer does not close, Warner shareholders would have to bear $4.7 billion in unreimbursed costs.

Netflix Welcomes Warner’s Decision

Following the release of the letter to shareholders, Netflix voiced support for WBD's board, stating that it welcomes their commitment.

“The WBD Board remains fully supportive of and continues to recommend Netflix's merger agreement, recognizing it as the superior proposal that will deliver the greatest value to its stockholders, as well as consumers, creators and the broader entertainment industry,” said Netflix co-CEOs, Ted Sarandos and Greg Peters.

WBD stock is down 1% year-to-date, PSKY stock is down 7%, while NFLX stock has declined 3%.

Also See: GameStop Announces 100% ‘At-Risk’ Performance Award For CEO Ryan Cohen: GME Stock Gains Pre-Market

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