(Reuters) – Warner Bros rejected Paramount Skydance’s latest hostile takeover bid of $30 a share, but is giving the Hollywood studio seven days to see if it can come up with a better offer to buy the owner of HBO Max and the “Harry Potter” franchise, Warner Bros said on Tuesday.
Paramount informally proposed an even higher price per share, $31, Warner Bros. said, apparently drawing the board to the negotiating table.
The competitor has until February 23 to present its “best and final offer,” which Netflix can match under the terms of the merger agreement, Warner Bros. said.
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“Our board has not determined that your proposal has a reasonable chance of resulting in a transaction superior to the Netflix merger,” Warner Bros. Chairman Samuel DiPiazza Jr. and Chief Executive David Zaslav said in a letter sent Tuesday to Paramount’s board.
“We continue to recommend and remain fully committed to our transaction with Netflix.”
The two media giants have been vying for control of Warner Bros, its film and TV studios and its vast library of content, in a dispute that highlights the high stakes of a rapidly changing entertainment landscape.
An unnamed financial adviser to Paramount said its offer would be increased to $31 per share if Warner Bros agreed to open negotiations, and that it could go even higher, Warner Bros said in the letter, adding that it now expects a better, definitive proposal that includes a price above that amount.
Paramount shares rose 1.7% in pre-open trading, while Warner Bros rose 2.5%.
Paramount’s current offer for the entire company comes to $108.4 billion, while Netflix is offering $82.7 billion for its studio and streaming businesses alone.
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Warner Bros., which has repeatedly rejected offers from Paramount to buy the entire company, is moving forward with a vote on Netflix’s $27.75-per-share bid for its studio and streaming services. Shareholders will vote on March 20 on the merger with Netflix, which would come after Warner Bros spins off its Discovery Global cable operations, which include CNN, TLC, Food Network and HGTV, into a separate publicly traded company.
Discovery Global could earn between $1.33 and $6.86 per share, according to Warner Bros. estimates.
Warner Bros’ decision to engage with Paramount, which required a special waiver from Netflix, marks a shift for the studio.
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Paramount previously said the board “never meaningfully engaged” with them on six different offers made by executives in the 12 weeks before Warner Bros announced the merger deal with Netflix on December 5. A hostile tender offer launched by Paramount days later was rejected later that month.
Paramount’s revised offer, which included a personal guarantee of $40 billion in stock from Oracle founder Larry Ellison, father of Paramount Chief Executive David Ellison, was rejected in early January.
The decision to begin negotiations with a competitor also comes as Warner Bros faces increasing pressure from activist investor Ancora Holdings, which has acquired a stake in the company and plans to oppose the Netflix deal.
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