Paramount launches hostile bid for Warner Bros

Does WB have to pay the breakup fee to Netflix if a Paramount hostile takeover succeeds?

No. Breakup fes are for when the buyer backs out or theere are external forces that prevent the merger. You can also have a breakup fee if the buyee wants out but that's a different thing. In this case it's Paramount saying "we'll up out government-blocks-the-sale fee from $2.xbn to $5bn" which is saying they have a lot of confidence the merger will go through.

> in this case it's Paramount saying "we'll up out government-blocks-the-sale fee from $2.xbn to $5bn" which is saying they have a lot of confidence the merger will go through

No.

Paramount has nothing to do with these numbers, which both come from the Plan of Merger among Netflix, Warner and others [1].

Paramount's bid constitutes an Acquisition Proposal under § 6.2(c). It is a "proposal, offer or indication of interest" from Paramount, a party who is not "Buyer and its Affiliates," which "is structured to result in such Person or group of Persons (or their stockholders), directly or indirectly, acquiring beneficial ownership of 20% or more of the Company’s consolidated total assets."

Given it "is publicly proposed" after the date of the Plan of Merger and "prior to the Company Stockholder Meeting," it is a Company Qualifying Transaction (8.3(D)(x)).

If 8.3(D)(y) is then satisfied (a condition I got bored jumping around to pin down–if thar be dragons, they be here) and Warner consummates the Company Qualifying Transaction or "enters into a definitive agreement providing for" it (8.3(a)(D)(z)(2), the Buyer can terminate the Plan of Merger under 8.1(b)(iii). That, in turn, triggers the Company Termination Fee of $2.8bn, which is separate from the Regulatory Termination Fee of $5.8bn Netflix would have to pay Warner if other shit happened.

[1] https://www.sec.gov/Archives/edgar/data/1065280/000119312525...

I assure you that Paramount has everything to do with things Paramount does, especially when it comes to purchasing prices and the numbers used to represent prices. Paramount is intimately involved with their own business, sometimes too involved.

This article is relating to Paramount's continued attempt to purchase WB despite Netflix announcing a deal with WB.