Ancora Capital builds stake in Warner Bros, plans to oppose Netflix deal

Feb 11 (Reuters) – Activist investor Ancora Capital has built a stake in Warner Bros Discovery and plans to oppose the media company’s deal with Netflix for its studios and streaming assets, the latest twist in the heated Hollywood takeover battle.

Ancora, which has a stake of around $200 million in the HBO owner, said on Wednesday Warner Bros’ board has not adequately engaged in talks with Paramount Skydance over a rival offer for the whole company, including cable assets such as CNN and TNT.

Paramount and Netflix both covet Warner Bros for its leading film and television studios, extensive content library and major franchises such as “Game of Thrones,” “Harry Potter” and DC Comics superheroes like Batman.

Paramount had on Tuesday sweetened its bid by offering Warner Bros investors extra cash for each quarter the deal fails to close after this year and agreeing to cover the $2.8 billion breakup fee the HBO owner would owe Netflix if it walked away.

It did not increase its bid of $30 per share, or $108.4 billion including debt, but stressed again that its offer has a clearer path to regulatory approval than the Netflix deal of $27.75 per share, or $82.7 billion including debt.

Central to the bidding war is a planned spin-off of Warner Bros’ cable assets that is crucial to the Netflix deal.

The Warner Bros board believes the Netflix acquisition is superior to Paramount’s bid as its investors would retain a stake in the separately traded Discovery Global.

Paramount has argued the cable assets are virtually worthless and that Netflix’s offer leaves Warner Bros shareholders exposed to significant uncertainty as the amount of cash they would receive depends on Discovery Global’s financial condition at the time of the spinoff.

The David Ellison-led company has extended the deadline for its tender offer to February 20, giving it more time to convince investors.

(Reporting by Aditya Soni in Bengaluru; Editing by Arun Koyyur)