What is a hostile takeover? What to know about Paramount's bid for Warner Bros.

Paramount in recent days launched a hostile takeover bid to acquire Warner Bros. Discovery, just days after Netflix struck a deal to purchase a large part of the media giant.

The rival, multi-billion-dollar efforts to acquire streaming platform HBO Max and movie studio Warner Bros., among other assets, could upend the media industry and shape content viewed by hundreds of millions of people.

Netflix counted 301 million global subscribers as of late 2024, the most recent date for which data is available, an earnings report showed.

Streaming giant Netflix appeared to win the bidding war for Warner Bros. Discovery last week, when the two firms announced their merger. Within days, however, Paramount announced its hostile bid, meaning Paramount plans to appeal to Warner Bros. Discover shareholders in an effort to overcome the wishes of management.

Here's what to know about a hostile takeover bid and how it could play out:

What is a hostile takeover bid?

In the event of a company merger, leadership at both firms usually sign off on the deal and unveil the new plans, just as Netflix and Warner Bros. Discovery did last week.

Bidders eager to merge with an existing firm can take an alternative approach, however, bypassing company leadership and seeking support directly from shareholders. Bidders sometimes take this approach if upper management at the target company appears unfriendly to their offer.

There are two different strategies usually taken up by hostile bidders: A tender offer or a proxy vote.

If a bidder opts for a tender offer, the firm or individual promises to purchase shares of the target company's stock at an elevated price, inducing shareholders to sell their holdings and grant the bidder a controlling stake in the company. Once the bidder acquires sufficient shares, it can appoint new board directors and exert influence over company decisions.

A proxy vote, by contrast, entails an effort to persuade existing shareholders to vote in favor of installing the bidder and its allies onto the board of directors. In turn, the newly receptive board of directors can approve the merger.

Paramount appears to be carrying out a tender offer, though the full details remain unclear. Under the terms of the $108 billion Paramount bid, Warner Bros. Discovery shareholders would be offered $30 per share, which represents a 139% premium to the stock price as of Sept. 10, 2025, Paramount said.

Netflix established its agreement with Warner Bros. Discovery at a lower price of $27.75 per share, though the Netflix offer excluded Warner Bros. Discovery's cable channels.

Do hostile takeover bids succeed?

Hostile takeover bids carry a mixed history, including notable successes and defeats.

Elon Musk, for instance, prevailed in a hostile effort to acquire Twitter in 2022. The world's richest person offered to buy Twitter now called X at $54.20 per share, valuing the company at about $44 billion. The offer amounted to a 38% premium above where the price stood a day before Musk's investment in Twitter became public.

Twitter adopted a common corporate defense tactic known as a "poison pill." A poison pill allows current stockholders to purchase additional shares at a discounted price, diluting the shares owned by the hostile bidder and making it more expensive for them to buy the company.

Ultimately, however, Twitter accepted Musk's offer. A legal dispute over the merger delayed its completion, but Musk eventually took hold of the company and instituted major changes.

Other examples of successful takeover bids include food company Kraft's acquisition of Cadbury in 2010, as well as media firm Comcast's acquisition of AT&T's broadband unit in 2002.

A high-profile failed bid in 2011 sought ownership of Clorox, but activist investor Carl Icahn came up short in a proxy campaign targeting the company's shareholders.