Netflix has revamped its acquisition proposal for Warner Bros. Discovery (WBD) to an all-cash offer, moving away from the initial $82.7 billion cash-and-stock deal. This shift aims to speed up the sale of WBD’s studios and streaming assets, especially amid pressure from competitor Paramount, which is pushing shareholders towards its own $108 billion all-cash proposal.
“The WBD Board continues to support and unanimously recommend our transaction, and we are confident that it will deliver the best outcome for stockholders, consumers, creators, and the broader entertainment community,” stated Ted Sarandos, Netflix’s co-CEO. “Our revised all-cash agreement will enable an expedited timeline to a stockholder vote and provide greater financial certainty at $27.75 per share in cash, plus the value from the planned separation of Discovery Global.”
The updated deal will be financed through existing cash, available credit, and other funding sources. Both Netflix and WBD boards have approved the changes. However, closing the overall acquisition still requires regulatory approvals and support from WBD shareholders.
Initially, under the transaction terms announced on December 5, WBD shareholders were set to receive $23.25 in cash along with $4.50 in Netflix stock, with specific conditions if Netflix’s stock fell below $97.91. By December 8, Netflix’s shares dipped below that threshold, coinciding with Paramount’s announcement of what it called a “superior” all-cash hostile takeover bid, arguing that the Netflix agreement put WBD shareholders at risk of relying on “a complex and volatile mix of equity and cash.”
Bloomberg reported hints of the changes on January 13, citing sources familiar with the discussions. WBD has already dismissed Paramount’s takeover attempts and is now facing a lawsuit from the company led by David Ellison, demanding further insights into the Netflix merger deal. By switching to an all-cash format, Netflix aims to streamline the acquisition process and mitigate potential challenges from rival bidders or regulatory hurdles necessary for the merger’s completion.
