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In a shock twist, Netflix has declined to raise its bid to acquire Warner Bros. Discovery. As a result, David Ellison’s Paramount Skydance is now likely to emerge as the winner in the battle to acquire the studio.
Netflix co-CEOs Ted Sarandos and Greg Peters released a statement Thursday outlining their decision, saying the deal is “no longer financially attractive”. They add that it “was always a ‘nice to have’ at the right price, not a ‘must have’ at any price.” The co-CEOs say:
“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.”
With Netflix now out of the running, Paramount’s bid is almost certain to be accepted by the Warners board which determined earlier that the latest version was a ‘superior proposal’ to Netflix’s deal.
David Zaslav, president and CEO of Warner Bros. Discovery, says in a statement:
“Netflix is a great company and throughout this process Ted, Greg, Spence and everyone there have been extraordinary partners to us. We wish them well in the future. Once our Board votes to adopt the Paramount merger agreement, it will create tremendous value for our shareholders. We are excited about the potential of a combined Paramount Skydance and Warner Bros. Discovery and can’t wait to get started working together telling the stories that move the world.”
The latest proposal by Paramount was for $31 per share, but had sweeteners, including a $7 billion regulatory termination fee in the event the transaction does not close due to regulatory matters, as well as a $2.8 billion termination fee that Warner Bros. is now required to pay to Netflix to terminate the existing merger agreement.
Paramount CEO David Ellison said in a statement earlier today: “We are pleased WBD’s Board has unanimously affirmed the superior value of our offer, which delivers to WBD shareholders superior value, certainty and speed to closing.”
In the wake of the announcement, Netflix shares have soared by more than 10% in after-hours trading. The co-CEOs say they will continue to do what they do, include puring cash into their own content with $20 billion being invested in films and series this year alone.
Source: THR
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