Paramount sues WBD over Netflix deal. WBD says Paramount’s price is still inadequate.

In a dramatic escalation of its attempts to acquire Warner Bros. Discovery (WBD), Paramount Skydance has initiated a lawsuit in Delaware Chancery Court. This legal move comes as Paramount aims to challenge WBD's recent $82.7 billion agreement to sell its streaming and film divisions to Netflix. The proposed transaction would result in the creation of a new entity called Discovery Global, which would house WBD's traditional cable networks. However, Paramount has been vocal in its ambition to secure WBD, having previously launched a hostile takeover bid valued at $108.4 billion. The company is actively persuading WBD’s shareholders that its offer is far superior to the Netflix deal. In a letter addressed to WBD shareholders, Paramount CEO David Ellison announced the lawsuit, which seeks to compel WBD to reveal critical financial details regarding the Netflix agreement. Specifically, the lawsuit requests transparency on how WBD assessed the equity of its Global Networks division and the rationale behind the purchase price adjustments related to debt. Currently, Netflix's offer translates to approximately $27.72 per share, which includes a cash component of $23.25 and shares of Netflix stock. In contrast, Paramount's all-cash proposal stands at $30 per share. Paramount is hopeful that gaining access to this financial information will persuade more WBD shareholders to consider its offer before the January 21 deadline. Before the announcement of WBD’s deal with Netflix, Paramount had expressed concerns over the fairness of WBD's bidding process. In his letter, Ellison expressed confusion over WBD's lack of response to Paramount's December 4th offer and criticized the limited communication regarding the negotiations. He remarked on the apparent absence of thorough discussions within WBD's board leading up to the acceptance of what he described as an inferior deal. As part of its ongoing strategy, Paramount intends to nominate directors to WBD’s board during the upcoming annual shareholder meeting, aiming to challenge the approval of the Netflix agreement. The nomination window will open in three weeks, as noted in Ellison’s correspondence.