Warner Bros Discovery (WBD) has urged shareholders to reject a hostile takeover bid from Paramount Skydance, calling the offer “inadequate” and “illusory”.

On 8 December, Paramount Skydance (PSKY) launched a $108.4bn (£81.4bn) unsolicited bid for WBD, taking its proposal directly to shareholders. Paramount described the move as a “clearly alternative offer” to Netflix’s proposed $72bn (£54bn) acquisition of the media group.

In a letter to shareholders today (17 December), WBD’s board said the Paramount offer is “nearly identical” to a proposal it previously rejected and “provides inadequate value and imposes numerous, significant risks and costs on WBD”.

“As a board, we have now conducted another review and determined that PSKY’s tender offer remains inferior to the Netflix merger. The board continues to unanimously recommend the Netflix merger, and that you reject the PSKY offer and not tender your shares,” the letter said.

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The board also accused Paramount of misleading shareholders about the financing behind its bid, claiming the proposed transaction does not have a “full backstop” from the Ellison family, as suggested.

Paramount Skydance is led by CEO David Ellison, whose Skydance Media merged with Paramount Global in August. Ellison is the son of Oracle co-founder – and one of the richest men in the world – Larry Ellison.

According to WBD, Paramount is relying on what it described as an “opaque revocable trust” rather than a secured financing commitment from a controlling shareholder, which it said creates additional uncertainty.

WBD’s board also raised concerns over Paramount’s forecast $9bn (£6.7bn) in cost synergies from the merger, warning that such cuts “would make Hollywood weaker, not stronger”.

Netflix has reiterated its support for its agreed acquisition of WBD and echoed the board’s recommendation. In a separate letter to WBD shareholders, Netflix described Paramount’s bid as an “unsolicited, inferior and illusory tender offer”.

“Today they [WBD Board] have reaffirmed that this transaction is the best and most certain path forward for WBD and its stockholders, and therefore recommend you vote to approve the Netflix Merger when the WBD stockholder meeting is convened,” the letter said.

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Netflix confirmed on 5 December that it had entered into a definitive agreement to acquire Warner Bros Discovery, including its film and television studios, alongside streaming assets HBO and HBO Max.

Paramount has said it is offering $30 (£22) per share in cash for WBD, including its Global Networks segment, after claiming WBD’s board “never engaged meaningfully” with six acquisition proposals over a 12-week period.

Paramount argues its bid would deliver $18bn (£13.5bn) more in cash to shareholders than Netflix’s offer, which values WBD at $27.25 (£20.30) per share through a mix of cash and stock.