A private equity firm owned by US President Donald Trump’s son-in-law has pulled its backing for Paramount’s hostile takeover bid for Warner Bros Discovery.
Jared Kushner’s company Affinity Partners had agreed financial backing for Paramount’s 30 US dollars (£22.50) a share bid for Warner Bros, which was lodged just days after Warner Bros agreed to be bought by Netflix in early December in a 72 billion dollar (£54 billion) deal.
It comes as reports suggest Warner Bros is planning to recommend its investors reject Paramount’s bid on the grounds that the value, financing and terms of the deal do not match up to the offer from Netflix.
Paramount is offering 30 dollars (£22.50) a share in cash for Warner Bros and has taken the bid straight to investors, asking them to reject the deal with Netflix.
Paramount’s offer values Warner Bros at 108.4 billion dollars (£81.3 billion) including debts, trumping Netflix’s 27.75 dollars (£20.81) per share offer, which values Warner Bros at 72 billion dollars (£54 billion), or 82.7 billion dollars (£62 billion) including debts.
US streaming giant Netflix agreed to buy the Warner Bros Discovery film and TV studios business, whereas Paramount has bid for the whole of Warner Bros.
Mr Trump had already warned the Netflix takeover of Warner Bros “could be a problem” because of its combined market share, confirming he would be involved in the decision about whether the US federal government should approve the deal.
Paramount had said in its appeal to win over Warner Bros shareholders that its offer would be more likely to pass regulatory scrutiny.
Mr Kushner’s decision to pull his firm’s financial backing is seen as taking away a possible advantage for Paramount to secure Mr Trump’s approval for its rival bid.
Paramount’s bid still has the financial backing of wealth funds run by three governments in the Persian Gulf, widely reported as Saudi Arabia, Abu Dhabi and Qatar.
Paramount earlier revealed it had made six takeover approaches to Warner Bros over 12 weeks, but claimed Warner Bros “never engaged meaningfully”.
An auction process for Warner Bros saw both Paramount and Sky owner Comcast lose out to Netflix, which owns HBO, streaming service HBO Max and franchises such as Harry Potter and Batman.
