Netflix Switches to All-Cash $82.7 Billion Offer for Warner Bros Discovery to Outflank Paramount
Netflix has converted its bid for Warner Bros Discovery into an all-cash offer worth 82.7 billion dollars, maintaining its $27.75-per-share valuation in a decisive move to outmanoeuvre Paramount Skydance’s rival proposal. According to a regulatory filing on Tuesday, the revised bid has the unanimous backing of Warner Bros’ board and aims to provide shareholders with faster approval and greater financial certainty.
The new offer replaces Netflix’s previous cash-and-stock structure, which included $23.25 in cash and $4.50 in Netflix shares. The shift comes amid a fierce battle for one of Hollywood’s most valuable entertainment portfolios, which includes the “Game of Thrones” and “Harry Potter” franchises and DC Comics’ iconic superheroes “Batman” and “Superman.”
Netflix co-CEO Ted Sarandos said the all-cash deal would “enable an expedited timeline to a stockholder vote and provide greater financial certainty.” Warner Bros has scheduled a special investor meeting for April to approve the merger.
Paramount’s Rival Efforts Lose Momentum
Paramount Skydance, led by David Ellison, has aggressively campaigned to persuade Warner Bros shareholders that its $30-per-share all-cash offer is superior. However, Warner Bros’ board maintains that the Netflix proposal offers stronger value due to the inclusion of Discovery Global, a forthcoming spin-off that will house assets such as CNN, TNT Sports and Discovery+.
Warner Bros’ advisers valued Discovery Global between $1.33 and $6.86 per share, depending on its future market performance. Paramount has dismissed the spin-off’s worth as negligible. The Delaware court last week rejected Paramount’s request for expedited disclosure of Warner Bros’ cable TV valuations, dealing another blow to its effort to challenge the deal.
Paramount’s tender offer is set to expire on January 21, and analysts say it faces growing pressure to either raise its bid or withdraw. “Unless Paramount raises its bid, the appeal will be window dressing,” said Ross Benes, an analyst at Emarketer.
Debt, Ratings and Regulatory Hurdles
If completed, the Netflix-Warner merger would leave the combined company with approximately 85 billion dollars in debt, less than the 87 billion dollars projected under Paramount’s offer. Netflix’s investment-grade credit rating and market valuation of 402 billion dollars also strengthen its position compared with Paramount’s 12.6 billion dollars and junk-rated bonds.
Netflix has also agreed to allow Warner Bros to reduce the debt burden assigned to Discovery Global by 260 million dollars. Warner Bros said the deal’s structure provides immediate liquidity and long-term value for its shareholders.
Despite the strong financial case, the merger will likely face regulatory scrutiny amid growing bipartisan concern in Washington about media consolidation and its impact on competition and consumer choice. The Ellison family, leading Paramount Skydance, has argued that their ties to President Donald Trump could ease the regulatory approval process.
Shares of Netflix rose 1.2% ahead of its quarterly earnings report, while Paramount shares slipped 1% and Warner Bros stock remained steady. The final outcome is expected to hinge on shareholder approval later this year.
with inputs from Reuters