After evaluating a sweetened offer from Paramount earlier this week, Warner Bros. Discovery’s board on Thursday determined that the revised merger proposal – which upped the value to $31 per WBD share for media company – is indeed superior to an existing agreement with Netflix.
*Update And it looks as though Paramount may have finally succeeded in its continued pursuit to acquire all of WBD, including linear networks such as TNT and CNN. If Netflix wanted to secure WBD’s studio and streaming businesses, including Warner Bros. TV and film studios, HBO and HBO Max, the SVOD giant would have four business days to enhance and come back with its own revised offer that matches or surpasses Paramount’s proposal.
After that period, if the board determined Paramount’s is still the best deal, it has the right to terminate the current Netflix agreement.
In the announcement naming Paramount's offer superior, WBD said its board continued to recommend in favor of the Netflix transaction to shareholders – as it has through multiple revised unsolicited offers from Paramount – and had not modified or withdrawn that position.
However, on Thursday, Netflix released a statement saying that it has declined to raise its offer for Warner Bros. Discovery.
Netflix previously amended its agreement from a stock and cash deal to all-cash (which value ranges between $21.23 to $27.75 per WBD share), amid Paramount’s continued takeover interest.
"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," stated Netflix co-CEOs Ted Sarandos and Greg Peters in response to the determination.
David Ellison-led Paramount has been seeking to acquire WBD since last fall, an effort that continued even after Netflix was initially announced the winning bidder on December 5.
Over the past few months Paramount has made changes to the offer, such as including a personal guarantee for part of the financing offer by Oracle founder and David Ellison’s father Larry Ellison, agreeing to pay the $2.8 billion termination fee that WBD would be required to pay Netflix if it terminates a deal and a daily “ticking fee,” which if a deal with Paramount didn’t close by a certain date would pay WBD shareholders $0.25 per share each quarter after until completion.
Despite earlier rejections by the WBD board to Paramount offers, after the ticking fee and other amendments, WBD gave Paramount a seven-day limited window to give its best and final offer - which showed up earlier this week when Paramount raised the price with an all-cash offer valuing WBD at $31 per share, up from its previous $30 per share.
In addition to increasing the purchase price, Paramount’s latest revised proposal accelerated the timing of the daily ticking fee from the previous December 31, 2026, start date to after September 30, 2026, and increased a termination fee to $7 billion payable by Paramount in the event the deal doesn’t close because of regulatory challenges. It also agreed to a “Company Material Adverse Effect” definition that excludes the performance of WBD’s Global Linear Networks business.
"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,” stated Paramount CEO David Ellison following the WBD board’s determination Thursday.
*Article updated to reflect the most current information about Netflix declining to raise its bid for WBD and addition of related quote.