An apparent takeover attempt being concocted by a peer was the main factor behind Warner Bros Discovery (WBD 0.18%) stock's precipitous rise on Thursday. On a media report that the storied entertainment company is in play, investors piled into the stock in anticipation of a generous buyout offer. Warner soared almost 29% higher in price that trading session.
Hollywood megadeal in the works?
That afternoon, The Wall Street Journal published a story stating that Paramount Skydance is making preparations to submit a majority cash bid for Warner. This effort is apparently backed by the family of Paramount Skydance CEO David Ellison, which includes Oracle co-founder and executive chairman Larry Ellison and film producer Megan Ellison. It wasn't immediately clear which family members might be involved in the bid.
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The Journal, citing unnamed "people familiar with the situation," wrote that Paramount Skydance's play will be for the entirety of the sprawling Warner.
The business newspaper added that in preparing a bid, Paramount Skydance hopes to get the jump on big tech and entertainment conglomerates that might want to lay their hands on Warner assets.
If successful, a combination of Paramount Skydance and Warner would be earth-shaking for the entertainment industry. Combined, the two own a dizzying number of familiar entertainment properties, including cable/streaming channel HBO, superhero franchise base DC Studios, and Nickelodeon Movies.
The Journal did not speculate as to how much Paramount Skydance plans to offer for Warner; however, the amount must be substantial. The latter company's market cap stood at over $40 billion after the run-up in the stock following the article's publication.
Neither Paramount Skydance nor Warner has yet officially commented on the report.
NASDAQ: WBD
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Given David Ellison's successful entry into Paramount Skydance last month, plus the considerable financial firepower he and his team can marshal, I'd say the Journal's report has a lot of credibility. I'd be cautious in approaching Warner's stock now, however, as we have no indication of what the price tag might be.
