The David Ellison-led company filed a lawsuit looking to force Warners into showing its work on how it determined Netflix's offer was better than its own.
By Winston Cho
A Delaware judge has turned down Paramount‘s bid to fast track a lawsuit looking to force Warner Bros. Discovery into giving shareholders more information about how it chose Netflix’s $82.7 billion offer.
The judge, Vice Chancellor Morgan Zurn of the Delaware Chancery Court, on Thursday rejected arguments that Paramount would suffer “irreparable harm” if the details aren’t disclosed. Amid plans to launch a proxy fight for Warner Bros. Discovery, Paramount chief executive David Ellison is betting that cornering the company into showing its work will help his case.
Warner Bros. Discovery has rejected Paramount’s $108.7 billion hostile offer. It’s widely expected that Netflix, which proposed a cash-and-stock offer valued lower than Paramount’s, will amend its bid to expedite the transaction as institutional investors take sides in the sale.
On Monday, Paramount filed a breach of fiduciary duty lawsuit against Warner Bros. Discovery’s board. It moved to expedite the case before its offer expires on Jan. 21.
In a statement, Paramount said that the ruling “does not pertain to the merits” of its complaint. “WBD shareholders need the information on the WBD Board’s evaluation of the Global Networks stub equity and the ‘risk adjustments’ performed on Paramount’s offer to make an informed decision,” it added. “WBD shareholders should ask why their Board is working so hard to hide this information. Paramount continues to urge WBD to make these disclosures so that WBD shareholders can make an informed decision.”
Warner Bros. Discovery in a statement called Paramount’s lawsuit “yet another unserious attempt to distract and the Judge saw right through it.”
Paramount has steadily been escalating its fight for Warner Bros. Discovery, whose board unanimously recommended shareholders to greenlight the Netflix takeover. The lawsuit is an effort to sway investors into siding with its offer or force Warners into engaging, though time isn’t on its side. “Here, in order to claim it had a higher value, the Board gave the partial formula for the Netflix Merger value, and only half the inputs,” it said in a court filing. “There may be only one reason for this omission: the math doesn’t add up.”
Warner Bros. Discovery, which said that Paramount’s lawsuit seeks “special treatment and may have other serious flaws,” has maintained that Netflix’s offer is better than Paramount’s because of regulatory risk and strategic fit.
