Warner Bros Discovery board rejects Paramount's Gulf-backed takeover bid

Warner Bros Discovery's board on Thursday rejected Paramount's $108 billion hostile takeover bid, saying it remained inferior to a rival bid from Netflix, citing “significant risks and costs” to WBD.

Paramount launched a hostile takeover bid backed by three Gulf sovereign wealth funds last week and asked Warner Bros' shareholders to reject a Netflix bid that was favoured by the board. Paramount is offering $30 per Warner share, while Netflix is offering $27.75.

“We are confident that our merger with Netflix represents superior, more certain value for our shareholders and we look forward to delivering on the compelling benefits of our combination,” said Samuel Di Piazza Jr, chairman of Warner Bros Discovery board of directors.

The rival bid was "inadequate, with significant risks and costs imposed on our shareholders”, he added.

Mr Di Piazza told CNBC the board had yet to decide on a date for a shareholder vote on the deal, although one is expected take place next spring or summer.

In a separate letter to shareholders disclosed in a regulatory filing, the board said Paramount “consistently misled” Warner Bros' shareholders that the proposed bid had a “full backstop” from the family of its chief executive David Ellison.

Backstop refers to a safety net guaranteeing that a takeover will be completed even if funding or investor support falls short.

In a regulatory filing last week, Paramount said the Ellison family and RedBird Capital had agreed to backstop the deal.