Netflix ups Warner Bros. bid with all-cash offer
▼ Summary
– Netflix has revised its acquisition offer for Warner Bros. Discovery to an all-cash deal, replacing its initial cash and stock agreement to expedite the sale.
– The revised $27.75 per share all-cash offer aims to provide greater financial certainty and speed up the shareholder vote process.
– The change is a response to a rival $108 billion all-cash hostile takeover bid from Paramount, which criticized Netflix’s original offer as complex and volatile.
– The amended deal has been approved by both companies’ boards but still requires regulatory and WBD shareholder approvals.
– Netflix is attempting to accelerate the acquisition and avoid further opposition from competitors or regulatory hurdles by switching to an all-cash structure.
In a bold move to secure its acquisition of Warner Bros. Discovery, Netflix has revised its offer to an all-cash deal, effectively raising the stakes against rival bidder Paramount. The streaming giant has abandoned its original $82.7 billion cash-and-stock proposal in favor of a straightforward cash transaction valued at $27.75 per share. This strategic shift aims to accelerate the sale process and provide greater financial certainty to WBD shareholders, who have been courted by Paramount’s competing $108 billion all-cash hostile bid.
Ted Sarandos, co-CEO of Netflix, expressed strong confidence in the revised agreement. He stated that the WBD Board continues to unanimously recommend the Netflix transaction, believing it delivers the optimal outcome for all stakeholders. The all-cash structure is designed to facilitate a quicker timeline for a shareholder vote, removing the complexity and market volatility associated with a mixed payment of stock and cash. The offer also includes the value from the planned separation of Discovery Global, adding another layer to the total consideration.
This amended deal has received unanimous approval from the boards of both Netflix and Warner Bros. Discovery. Financing will come from a combination of cash reserves, available credit, and other financial arrangements. However, finalizing the acquisition remains contingent upon securing necessary regulatory approvals and a favorable vote from WBD shareholders.
The original agreement, announced in early December, proposed a payment of $23.25 in cash and $4.50 in Netflix stock per WBD share. That deal included protective conditions should Netflix’s share price drop below $97.91. When the stock did indeed fall below that threshold shortly after the announcement, Paramount seized the opportunity to launch its rival bid. Paramount criticized the Netflix agreement as leaving WBD shareholders exposed to “a complex and volatile mix,” positioning its own all-cash offer as superior.
Reports of Netflix’s revised terms surfaced in mid-January, with insiders indicating the change was under discussion. Warner Bros. Discovery has already formally rejected Paramount’s takeover attempts. In response, Paramount has initiated legal action, suing WBD to disclose more details about its merger negotiations with Netflix. By switching to an all-cash proposal, Netflix is clearly attempting to streamline the acquisition, mitigate further opposition from competitors, and navigate the regulatory landscape more efficiently to bring the merger to a close.
(Source: The Verge)
