Following last week’s developments in the battle between Netflix and Paramount Skydance to acquire Warner Bros. Discovery—namely, Paramount being given an additional opportunity to present its “best and final offer” to Warner Bros. Discovery shareholders—things are moving to the next stage, as Warner Bros. Discovery’s (WBD) Board of Directors have deemed Paramount’s $31 per share, all-cash offer a “Superior Proposal,” as defined by the terms of WBD’s merger agreement with Netflix. Netflix, in turn, has announced that they will not be raising its own bid for WBD.
Said Netflix co-CEOs Ted Sarandos and Greg Peters in a statement, while “the transaction we negotiated would have created shareholder value with a clear path to regulatory approval,” the price to match Paramount’s Skydance updated bid renders the deal “no longer financially attractive, so we are declining to match [the bid]… 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.”
With Netfilx out of the running, Paramount Skydance’s acquisition of Warner Bros. Discovery is by no means a sure thing. The WBD board has yet to formally accept Paramount Skydance’s offer. Once they do, the deal will need to gain the approval of regulators in the U.S. and Europe; U.S. politicians on both sides of the aisle have been vocal in their concerns about an acquisition of Warner Bros. Discovery by a rival studio.
Under the terms of Paramount Skydance’s latest offer, they will be on the hook for the $2.8 billion fee owed to Netflix by WBD in order to terminate their agreement. Further, Paramount Skydance will owe a $7 billion regulatory termination fee should their acquisition of WBD fail due to regulatory matters.
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