Netflix has officially agreed to an $83 billion cash deal in the bidding war against Paramount to acquire Warner Bros. Discovery.
The streaming giant had previously made an $82.7 billion offer to Warner Bros. Discovery where roughly 84% of the payout would be cash. The rest would be paid out in stocks, making it a much riskier decision for WBD—as the payout would decrease if Netflix’s stock price fell. Paramount’s offer proposed a 100% cash payout, making it a more secure choice for WBD’s stakeholders.
Netflix Upgrades Its Offer To An All-Cash Bid
Netflix has now amended their offer, maintaining the $83 billion total but agreeing to a 100% cash payout. The two companies claim that this “simplifies the transaction structure, provides greater certainty of value for WBD stockholders, and accelerates the path to a WBD stockholder vote.”
Shareholders will have until April 2026 to vote upon this finalized deal, at which point rival studio Paramount will be pushed out of the bidding war. This “accelerated timeline” is the compensation that Netflix needed to finally compromise to an all-cash bid.
Paramount is yet to respond to Netflix’s amended agreement, though the company maintains its $30/share all-cash bid. Despite offering more money that Netflix, Paramount’s bids have been rejected by Warner Bros. Discovery on eight separate occasions.
Paramount has also declared that the studio is willing to launch a hostile takeover bid against WBD if the company does not respond to its lawsuit compelling the publication of Netflix’s valuations. This would give Paramount the opportunity to nominate its own candidates during WBD’s annual shareholder meeting who would supposedly back the Paramount deal over the Netflix deal.
Much of the disagreement between Paramount and WBD can be put down to Discovery Global, a proposed company whose shares, Paramount claims, would have zero value in an acquisition. WBD counters that Discovery Global is worth $2.41 to $3.77 per share.
WBD Responds To Netflix’s Offer
Warner Bros. Discovery CEO David Zaslav commented on the revised deal: “Today’s revised merger agreement brings us even closer to combining two of the greatest storytelling companies in the world and with it even more people enjoying the entertainment they love to watch the most.”
Netflix CEO Ted Sarandos added: “Together, Netflix and Warner Bros. will deliver broader choice and greater value to audiences worldwide, enhancing access to world-class television and film both at home and in theaters.”
As per the breakup fees states in Netflix/WBD’s agreement, the latter will have to pay $2.8 billion to Netflix if they back out of the deal. Netflix faces an even larger risk of $5.8 billion in compensation if the deal is rejected by regulators.
