Netflix has indicated a shift in its stance regarding the potential acquisition of Warner Bros. Discovery’s streaming and studio assets. The company stated that the deal was no longer financially appealing following Paramount Skydance’s revised offer of $31 per share for the sought-after Hollywood studio. Consequently, Netflix shares saw a rise of approximately 10% in after-hours trading.
In a statement, Netflix expressed its disciplined approach and decision not to match Paramount Skydance’s latest bid due to the lack of financial attractiveness at the revised price point. Warner Bros. Discovery acknowledged earlier in the day that Paramount’s updated offer was superior to the existing arrangement with Netflix.
Earlier in the month, Netflix had granted Warner Bros. a seven-day waiver to solicit a “best and final offer” from Paramount. Initially, Netflix had agreed in December to acquire Warner Bros.’ streaming and studio assets at a price of $27.75 per share, emphasizing the potential for increased shareholder value through the deal and the planned divestment of Warner Bros.’ cable assets.
Paramount, in its revised bid, increased the termination fee in case of regulatory approval failure to $7 billion US from $5.8 billion US. The company welcomed the Warner Bros. board’s unanimous reaffirmation of the superiority of its offer.
The Ellison Trust, backed by Larry Ellison, has committed $45.7 billion US in equity, up from $43.6 billion US, with additional funds available to meet Paramount’s bank solvency requirements. Furthermore, Bank of America Merrill Lynch, Citi, and Apollo have boosted their debt financing commitment to $57.5 billion US from the previous $54 billion US.
Additionally, activist investor Ancora Holdings, holding a minor stake in Warner Bros., has increased pressure on the company by alleging insufficient engagement with Paramount.