Bidding war impatience is growing among major Warner Bros. shareholders as Paramount and Netflix continue their battle for the media giant. With a shareholder vote looming, the question is how long large WBD investors will tolerate the board’s stance, especially given Paramount’s increased offer.
Institutional owners of Warner Bros. shares are reportedly losing patience as Paramount Skydance persists with its hostile tender offer, attempting to sway WBD investors away from Netflix’s rival bid. Many of these investors, having recently acquired WBD shares after Netflix’s initial bid announcement, are now eyeing Paramount’s offer with increasing interest.
Traditionally, corporate boards prioritize long-term strategy, but in a sale scenario, their legal duty shifts to maximizing shareholder value. Paramount’s direct appeal to investors, bypassing management, potentially creates conflict between shareholder preferences and the board’s preferred transaction.
The Role of Merger-Arbitrage Strategies
Since Netflix’s initial bid, several investment funds have increased their exposure to WBD stock, often employing merger-arbitrage strategies that capitalize on deal completion or further bidding. Investor data is still emerging, but it’s clear that many investors went long on WBD in anticipation of a sale. The question remains: will enough of them accept Paramount’s $30-per-share offer and grant Paramount a controlling stake in WBD?
Funds like the BlackRock Event Driven Equity Fund and the Vanguard Windsor II Fund have significantly increased their WBD holdings, according to Morningstar data. Oakmark Funds, holding approximately 3.8% of Warner Bros.’ outstanding shares, expressed satisfaction with the board’s efforts to unlock shareholder value and pledged to monitor the bidding war closely. Similarly, David Einhorn’s Greenlight Capital bought WBD, anticipating a final share price “in the low to mid $30s.”
“Many investors care only about the spread between the bid and final price. They also care about regulatory risk. They don’t want long court battles.”
Bidding War Impatience and Shareholder Strategy
Investors such as Oakmark and Greenlight prioritize the spread between the bid and final price, along with regulatory considerations. They seek swift resolutions and avoid protracted legal battles. Recent reports suggest Warner Bros. CEO David Zaslav is pushing Paramount to sweeten its $30-a-share bid, filing paperwork for an expedited “proxy” vote to approve Netflix’s $72 billion offer as leverage. But Paramount seems unlikely to increase its number.
Netflix’s Revised Offer and Paramount’s Strategy
Netflix recently adjusted its offer to match Paramount’s all-cash deal of $27.75 per WBD share for the streaming and studios assets, which WBD’s board seems to favor. Paramount’s all-encompassing offer signals a potentially faster closing, extending its tender offer deadline to March 2. A significant number of shareholders tendering at $30 could give Paramount a larger stake, forcing the board into a fiduciary dilemma. The bidding war impatience is palpable.
Regulatory Scrutiny and Market Uncertainty
Washington is signaling potential regulatory hurdles for Netflix. Netflix’s Chief Ted Sarandos and Warner Bros.’ Chief Revenue and Strategy Officer Bruce Campbell testified before a Senate Judiciary Committee hearing regarding the deal. Concerns about antitrust issues and market dominance are prevalent among politicians in the U.S. and Europe. related Finance news
Paramount can leverage this regulatory uncertainty, positioning its bid as the “competitive counterweight” to political and legal risks. The bidding war impatience is fueled by these uncertainties. If regulators block the Netflix deal, shareholders who tendered may face legal action and market instability. As antitrust scrutiny intensifies, the risk gap between the two deals widens, potentially favoring Paramount if investors weigh the risks carefully. Bidding war impatience is rising among Warner Bros. shareholders.
Bidding war impatience is definitely a factor for investors. The bidding war impatience could be a key to the final deal.
Source: MarketWatch
