In a significant shift in strategy, Netflix has proposed an all-cash deal for Warner Bros. Discovery (WBD), offering $27.75 per share. This revision comes approximately six weeks after the initial deal aimed at transforming the entertainment landscape was announced. The updated offer is a tactical response to fend off Paramount’s aggressive takeover attempt.
Details of the All-Cash Offer
Netflix’s move to offer cash instead of a mix of cash and stock is intended to simplify the transaction and enhance certainty for WBD shareholders. The company plans to finance this revised offer through its available cash, credit facilities, and committed financing.
- Original Offer: $23.25 per share (mix of cash and stock)
- Revised Offer: $27.75 per share (all cash)
Anticipated Outcomes for WBD
WBD is preparing for a special shareholder meeting to vote on the deal, expected to occur in the spring following a review by the U.S. Securities and Exchange Commission. David Zaslav, CEO of WBD, indicated readiness to expedite this process to secure shareholder approval.
Paramount’s Competitive Moves
Paramount has been proactive in its pursuit of WBD, advocating for its own offer of $30 per share. The company has also floated the idea of a proxy fight, intending to install board members who would support its acquisition plans.
- Paramount’s Strategy: Aiming for $30 per share
- Proxy Fight: A potential move to nominate a new board
Reactions and Future Implications
WBD’s leadership has countered Paramount’s claims, asserting that the Netflix deal alongside the formation of Discovery Global provides a superior option for shareholders. Samuel A. Di Piazza, Jr., the chair of the WBD board, emphasized the all-cash proposal as a means to enhance shareholder value and certainty.
As Netflix prepares to announce its quarterly earnings, industry analysts will be closely watching the developments surrounding these bidding wars. The outcome of this financial tug-of-war will have lasting implications for the entertainment sector.
