Netflix Plans Bold All-Cash Acquisition of Warner Bros. Studios and Streaming
Netflix is moving forward with a bold plan to acquire Warner Bros. Discovery, presenting a revised all-cash offer. This shift comes amid increasing competition from Paramount Skydance, which is making its own bid for the media giant.
Details of Netflix’s Acquisition Plan
The initial agreement proposed by Netflix involved payments to Warner Bros. Discovery shareholders, offering $23.25 in cash and shares worth $4.50 for each outstanding share of WBD. The deal’s enterprise value is approximately $82.7 billion. However, recent reports indicate that Netflix intends to switch to an all-cash offer, as cited in a report by the Wall Street Journal.
Reaction from Paramount Skydance
Paramount Skydance is actively contesting Netflix’s proposal. It aims to persuade WBD shareholders that its own all-cash offer of $30 per share is superior. Additionally, Paramount has filed a lawsuit demanding WBD disclose financial details regarding Netflix’s deal.
- Paramount plans a proxy fight at WBD’s annual meeting.
- It intends to nominate board candidates who support the Paramount bid.
Stock Market Reactions
Since the original Netflix acquisition announcement on December 5, its stock has dropped over 12%. The current trading price sits at $90.32 per share, which is below the agreed “collar” threshold of $97.91 a share. Under the original deal terms, a drop in Netflix’s share price would adjust the value of shares offered to WBD shareholders.
Paramount’s Analysis
According to recent analyses, the effective value of the Netflix transaction for WBD shareholders now stands at $27.42 per share. Paramount contends that the proposed spin-off of Discovery Global networks may not hold significant value.
Acquisition Components
If successful, Netflix’s acquisition would include:
- Warner Bros. film and television studios
- HBO and HBO Max streaming services
- Warner Bros. games division
Netflix’s previous bid also involved substantial debt financing, amounting to $59 billion, to be supported by banks such as Wells Fargo, BNP, and HSBC.
Paramount’s Backing
Paramount Skydance’s proposal has notable backing, including support from Larry Ellison, co-founder of Oracle, as well as several investment partners like RedBird Capital Partners and sovereign wealth funds from Saudi Arabia, Qatar, and Abu Dhabi.
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