Netflix has decided not to raise its offer for Warner Bros. Discovery (WBD) after the company’s board labeled a revised bid from Paramount Skydance as a “Company Superior Proposal.”
In a statement, Netflix co-CEOs Ted Sarandos and Greg Peters said the streaming giant would not match Paramount’s latest offer.
“The transaction we negotiated would have created shareholder value with a clear path to regulatory approval. However, we’ve always been disciplined, and at the price required to match Paramount Skydance’s latest offer, the deal is no longer financially attractive, so we are declining to match the Paramount Skydance bid,” the CEOs said.
They added: “Warner Bros. is a world-class organization, and we want to thank David Zaslav, Gunnar Wiedenfels, Bruce Campbell, Brad Singer and the WBD Board for running a fair and rigorous process. We believe we would have been strong stewards of Warner Bros.’ iconic brands, and that our deal would have strengthened the entertainment industry and preserved and created more production jobs in the U.S. But this transaction was always a ‘nice to have’ at the right price, not a ‘must have’ at any price.”
Netflix said its core business remains strong.
“Netflix’s business is healthy, strong and growing organically, powered by our slate and best-in-class streaming service. This year, we’ll invest approximately $20 billion in quality films and series and will expand our entertainment offering. Consistent with our capital allocation policy, we’ll also resume our share repurchase program.
We will continue to do what we’ve done for more than 20 years as a public company: delight our members, profitably grow our business, and drive long-term shareholder value.”
Following the announcement, Netflix’s shares rose around 10%.
Earlier, Warner Bros. Discovery said Paramount’s updated proposal — an all-cash offer of $31 per share — was superior to Netflix’s existing agreement. Under the terms, Paramount would also pay a $7 billion termination fee if the deal fails to secure regulatory approval. In addition, Paramount would cover the $2.8 billion termination fee WBD would otherwise owe Netflix for ending their prior merger agreement.
WBD had given Netflix four business days to match the improved bid. Netflix’s earlier revised proposal, submitted in January, was an all-cash offer valued at $72 billion, or $27.75 per WBD share.
During an earnings call, WBD CEO David Zaslav said any transaction would prioritize maximizing shareholder value and minimizing downside risk, adding that the board was leading a “rigorously highly competitive” sales process.
With Netflix stepping aside, WBD is now expected to move ahead with Paramount’s revised merger proposal.
