Netflix Staying away from purchase transactions Warner Brothers Discovery After the WBD board on Thursday deemed the revised bid, the studio and streaming assets paramount skydance For a better offer.
Earlier this week, Paramount increased its bid to acquire all of WBD for cash from $30 per share to $31 per share. This is the latest amendment to multiple offers put forward by Paramount in recent months since it moved forward with a hostile bid to acquire the company, voiding an agreement between WBD and Netflix to sell the legacy media company’s studio and streaming businesses for $27.75 per share.
Last week, Netflix granted WBD a seven-day waiver to re-sign with Paramount, resulting in an increased bid. Paramount’s offer covers the entire WBD, including pay TV networks such as CNN, TBS and TNT.
In a statement Thursday, the WBD board said that given Paramount’s superior bid, Netflix has four business days to revise its offer.
Instead, the streaming giant’s decision to pull out has put a pin in a protracted saga that has seen revised offers from both bidders.
“Netflix is a great company, and Ted, Greg, Spence, and everyone there have been special partners to us throughout this process. We wish them all the best in the future,” WBD CEO David Zaslav said in a statement, referring to Netflix co-CEOs Ted Sarandos and Greg Peters and CFO Spencer Newman. “If the Board votes to adopt Paramount’s merger agreement, it will create significant value for shareholders. We are excited about the potential of combining Paramount Skydance and Warner Bros. Discovery, and can’t wait to start working together to tell the stories that move the world.”
Netflix stock soared 10% in extended trading Thursday, while Paramount stock rose 5%. Warner Bros. Discovery stock fell 2%.
“The transaction we have negotiated would have created shareholder value with a clear path to regulatory approval,” Sarandos and Peters said in a statement. “However, we remain disciplined and decline to match Paramount Skydance’s bid as this transaction is no longer financially attractive at the price required to match Paramount Skydance’s latest offer.”
Paramount’s latest bid included a $7 billion breakup fee in case the proposed merger fails to win regulatory approval. The company also agreed to pay a $2.8 billion breakup fee that WBD would pay Netflix if the deal doesn’t go through.
Sarandos said in an interview with CNBC’s Julia Boorstin last week that Netflix granted WBD a waiver to restart negotiations with Paramount to provide clarity to shareholders.
Sarandos said at the time that “Paramount was making a fuss and flooding the room with confusion and confusion for shareholders…including announcing all these fictitious offers and talking directly to shareholders and bypassing the Warner Bros. Discovery board.” “So we have given these shareholders the opportunity to get exactly what they deserve: complete clarity and certainty.”
However, Sarandos could not comment on whether Netflix would raise its offer to match Paramount’s revised bid.
And on Thursday, Sarandos attended a meeting at the White House to discuss a possible partnership.
“Warner Bros. is a world-class organization, and I would like to thank David Zaslav, Gunnar Wiedenfels, Bruce Campbell, Brad Singer, and the WBD Board of Directors for implementing a fair and rigorous process,” the Netflix co-CEOs said in a statement.
“We believe we would have been strong stewards of Warner Bros. and our deal would have strengthened the entertainment industry and retained and created more production jobs in the United States,” they said. “But this deal has always been a ‘nice to have’ at the right price, not a ‘must have’ at any price.”
