Netflix Counters Warner Bros with All-Cash Bid to Thwart Paramount
Netflix has strengthened its bid for Warner Bros Discovery (WBD) by moving to an all-cash offer of $82.7 billion (£61.5 billion). This strategic shift aims to counter a hostile takeover attempt from Paramount Skydance, which has proposed a competing offer of $108.4 billion. The new cash proposal follows Netflix’s earlier bid, which included both cash and shares at a valuation of $27.75 per share.
Details of the All-Cash Offer
The all-cash structure of Netflix’s offer simplifies the transaction for WBD stockholders. Ted Sarandos, co-CEO of Netflix, emphasized that this approach provides greater certainty in value and accelerates the timeline for a stockholder vote, which could occur as early as April. Shareholders will also receive shares in the global networks business, which includes notable properties like CNN and the Discovery Channel, as that segment will be separated into a new entity.
Implications of Competing Offers
- Paramount Skydance is attempting to sway WBD investors towards its $108.4 billion bid.
- Paramount has filed a lawsuit for financial information disclosure and plans to nominate directors to WBD’s board.
- A Delaware court recently rejected Paramount’s lawsuit challenges.
WBD’s board has continuously advised shareholders against the Paramount bid, citing the risks associated with what it termed the “largest LBO in history.” The board unanimously supports the Netflix proposal, reiterating its advantages for stockholders and the broader entertainment sector.
Consequences of the Bids
If WBD opts for the Netflix deal, it would incur a breakup fee of $2.8 billion should it decide to walk away. In contrast, the Paramount bid would result in $4.7 billion in costs, including the breakup fee to Netflix and additional financial commitments. Paramount has also increased its own termination fee to $5.8 billion in a bid to match Netflix’s offer.
The stakes are high for all parties involved. As negotiations and legal maneuvers continue, the outcome could reshape the landscape of media and entertainment significantly.
