Netflix ditches Warner Bros. Discovery deal after Paramount offer deemed superior
netflix walking away from purchase agreement Warner Bros. Discovery’s Studio and broadcast assets after WBD board accepted a revised proposal on Thursday Paramount Skydance It will be a superior offer.
Earlier this week, Paramount increased its offer to acquire all of WBD from $30 per share to $31 per share, all in cash. It was the latest twist in a string of offers Paramount has made in recent months, with a deal between WBD and Netflix to sell the former media company’s studio and streaming businesses for $27.75 per share now nixed as it moves forward with a hostile bid to acquire the company.
Last week, Netflix granted WBD a seven-day waiver to re-engage with Paramount, prompting the bid to go up. Paramount’s offer applies to all of WBD, including pay TV networks like CNN, TBS and TNT.
WBD’s board of directors said Thursday that Netflix has four business days to make changes to its own offer in light of Paramount’s superior offer.
Instead, the streaming giant’s decision to leave puts a needle in a protracted saga that has seen changing offers from both bidders.
Netflix shares rose 10% in extended trading Thursday. Warner Bros. Discovery’s shares fell 2%.
“The transaction we are negotiating would create shareholder value with a clear path to regulatory approval,” Netflix co-CEOs Ted Sarandos and Greg Peters said in a statement. he said. “However, we have always been disciplined and a deal at the price required to match Paramount Skydance’s latest offer is no longer financially attractive, so we decline to match the Paramount Skydance offer.”
The latest Paramount offer included a $7 billion breakup fee if the proposed merger did not receive regulatory approval. The company also agreed to pay the $2.8 billion breakup fee that WBD would owe Netflix if the deal does not go through.
Sarandos told CNBC’s Julia Boorstin in an interview last week that the company had given WBD a waiver to reopen Paramount talks to provide clarity to shareholders.
“Paramount is making too much noise, throwing the region into confusion for shareholders…including pitching all these hypothetical offers, talking directly to shareholders, and bypassing the Warner Bros. Discovery board,” Sarandos said at the time. “So we’ve given these shareholders the opportunity to get exactly what they deserve, which is complete clarity and certainty.”
However, Sarandos was unable to comment on whether Netflix would develop its own proposal to match the revised Paramount proposal.
“Warner Bros. is a world-class organization and we want to thank David Zaslav, Gunnar Wiedenfels, Bruce Campbell, Brad Singer and the WBD Board of Directors for conducting a fair and rigorous process,” Netflix co-CEOs said in a statement. he said.
“We believe we will be strong servants of Warner Bros..” iconic brands and our deal will strengthen the entertainment industry and preserve and create more manufacturing jobs in the U.S. “But this transaction was always a ‘nice to have’ transaction at the right price, not a ‘must have’ at all costs.”
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