Paramount Skydance Corp. today made a bid to acquire Warner Bros Discovery Inc. for $108.4 billion.

Acquisition offers are usually sent to a company’s board of directors for approval. Paramount’s bid, in contrast, is structured as a tender offer. That means the company hopes to bypass the board and buy shares directly from Warner Bros Discovery investors, which amounts to a hostile takeover attempt.

Warner Bros Discovery was formed through a 2022 merger that left it with $50 billion in debt. That complicated financial position opened the door to the prospect of a sale, which materialized last week when the company accepted a $72 billion takeover offer from Netflix Inc. The streaming giant plans to finance the deal with a combination of cash and stock.

Paramount, the company behind today’s hostile bid for Warner Bros Discovery, was also formed through the merger of two entertainment businesses. It’s led by Chief Executive Officer David Ellison, the son of Larry Ellison. The Oracle Corp. co-founder supported the formation of Paramount with a $6 billion investment.

There are several major differences between the company’s hostile bid and the offer that Warner Bros Discovery accepted from Netflix last week. Notably, Paramount hopes to buy all of the company whereas the streaming giant only plans to acquire some assets. Netflix is not buying Warner Bros Discovery’s Global Networks business, which includes media brands such as CNN.

Paramount argues that its offer has a higher chance of receiving regulatory approval. In a press release designed to win over Warner Bros Discovery investors, the company stated that the current deal would grow Netflix’s share of the global subscription video on demand market to 43%. Antitrust regulators often scrutinize transactions that significantly grow a leading market player’s revenue share.

Paramount also presented other arguments in the release. 

The company said Netflix, which plans to finance about 16% of the acquisition with stock, is offering “a complex and volatile mix of equity and cash.” Paramount plans to finance its bid entirely in cash. The Larry Ellison-backed company pointed to its “close technology relationship with Oracle” as another advantage.

In the event that its hostile takeover attempt succeeds, Paramount plans to expand Warner Bros Discovery’s lineup of theatrical releases. The company would also pursue cost-cutting opportunities. Paramount estimates that the acquisition would enable it to achieve $6 billion in annual synergies on top of the $3 billion it hopes to realize through a previously announced efficiency drive.

Photo: Warner Bros Discovery