On February 11, the Wall Street Journal reported that activist investor Ancora Holdings has established a holding of about $200 million in Warner Bros. Discovery (WBD) and plans to oppose Warner's sale of its film and TV studios and HBO Max streaming service to Netflix, people familiar with the matter said.
Netflix
Ancora could announce its position as early as Wednesday, people familiar with the matter said. The company believes that Warner failed to adequately communicate with rival David Ellison's Paramount Skydance Company after it offered to acquire all of Warner's businesses, including its cable network unit, for $30 per share in cash.
Even with small stakes, the involvement of activist investors will add more uncertainty and drama to this already protracted battle for Hollywood studios.Netflix has signed a deal worth $72 billion to acquire Warner, but Paramount has offered nearly $78 billion to acquire the entire company, while simultaneously launching a direct offer to shareholders and threatening a board battle.
proxy battle
Ancora funds manage about $11 billion in assets and have a history of lobbying during deal processes. People familiar with the matter said it has privately told Warner CEO David Zaslav that it may initiate a proxy fight if Warner's board does not negotiate a deal with Paramount that is best for shareholders.
As of Tuesday, Warner's market value was about $69 billion, which means Ancora's current stake is less than 1%.However, people familiar with the matter revealed that Ancora plans to continue to increase its stake in Warner. Even if the shareholding ratio is not high, its intervention will still form a voice that may unite other investors to oppose the Netflix transaction.
At present, most shareholders are still waiting to see which deal is better, and expect that the bidder may further modify the offer price.A shareholder vote is expected to be held next month.
Warner CEO Zaslav
Paramount strengthened its hostile takeover bid on Tuesday, adding new terms that include Paramount covering the $2.8 billion breakup fee Warner needs to pay Netflix if its deal with Netflix falls apart.The company also announced the addition of a "delay compensation" clause. Starting from January 2027, for each quarter in which the completion of the transaction is delayed, an additional compensation of 25 cents per share will be paid to Warner shareholders.
People familiar with the matter revealed that if Ancora advances the director nomination process, it will focus on replacing board members who are close to Zaslav. They added that Ancora had privately asked Zaslav whether he was inclined to accept the Netflix offer in anticipation of a senior executive position after the deal was completed.
Ancora had antitrust concerns about the Netflix deal and called the deal "uncertain and less favorable," according to a document seen by The Wall Street Journal. It also questioned the spinoff of Discovery Global, noting that it would shift $17 billion in Warner debt to the cable network unit, which is seeing declining audiences.