Warner nixes Paramount's bid (again), citing proposed debt load

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Paramount’s campaign to acquire Warner Bros.Discovery was dealt another blow Wednesday after Warner’s board rejected the latest bid from the company.The board cited the enormous debt load that Paramount would need to finance its proposed $108-billion takeover.Warner’s board this week unanimously voted against Paramount’s most recent hostile offer.

Members concluded the bid backed by tech billionaire Larry Ellison and Middle Eastern royal families was not in the best interest of the company or its shareholders.The move marked the sixth time Warner’s board has said ‘no’ to Paramount since Paramount Chief Executive David Ellison first expressed interest in buying the larger entertainment company in September.In a Wednesday letter to investors, Warner board members wrote that Paramount Skydance has a market value of $14 billion.

However, the firm is “attempting an acquisition requiring $94.65 billion of [debt and equity] financing, nearly seven times its total market capitalization.” The structure of Paramount’s proposal was akin to a leveraged buyout, Warner said, adding that if Paramount was to pull it off, the deal would rank as the largest leveraged buyout in U.S.history.“The extraordinary amount of debt financing as well as other terms of the PSKY offer heighten the risk of failure to close, particularly when compared to the certainty of the Netflix merger,” the Warner board said, reiterating a stance that its shareholders should stick to its preferred alternative to sell much of the company to Netflix.

Hollywood Inc.Netflix wants to buy Warner Bros.

and HBO, but Paramount refuses to go away, launching a hostile bid.Here’s a timeline of key developments.The move puts pressure on Paramount to shore up its financing or boost its cash offer above $30 a share.

However, raising its bid without increasing the equity component would only add to the amoun...