Warner Bros. resumes acquisition talks with Paramount, but Netflix deal still the favorite
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Warner Bros. will restart acquisition talks with Paramount Skydance after receiving a seven-day grace period to do so from its preferred bidder, Netflix.
Warner Bros. Discovery – which has HBO Max and a wealth of premium titles harry potter Series of DC superhero franchises – told in one regulatory filing tuesday This waiver would allow discussion of unresolved “deficiencies” in Paramount’s previous proposals.
The company now has until Monday to negotiate a potential transaction with Paramount Skydance. Netflix is also allowed to match Paramount’s offer under the terms of its merger.
Warner Bros. had previously rejected Paramount’s offers, which included hostile bid by Paramount in December. But just because talks are now resuming doesn’t mean Warner has changed its position, which the company made clear in its response.
“Our board has not determined that your proposal is reasonably likely to result in a better transaction than the Netflix merger,” Warner Bros. Chairman Samuel DiPiazza Jr. and CEO David Zaslav said in a letter sent to the Paramount board on Tuesday.
“We will continue to recommend and remain fully committed to our transaction with Netflix.”
Netflix has agreed to buy Warner Bros. Discovery’s TV and film studios and streaming division for US$72 billion. If the deal gets regulatory approval, it would change the media landscape, and some movie theater companies are expressing concern about their future.
In a statement of its own, Netflix also expressed confidence in the agreement it has already reached with Warner Bros.
“While we believe our transaction provides superior value and certainty, we recognize the ongoing distraction to WBD stockholders and the broader entertainment industry caused by PSKY’s actions,” Netflix said in a statement.
“Accordingly, we granted WBD a nominal relaxation of seven days in certain obligations under our merger agreement, so that they can engage with PSKY to fully and finally resolve this matter.”
Warner’s leadership has consistently supported Netflix’s proposal. In December, Netflix agreed to buy Warner’s studios and streaming business $72 billion for the US – Now in an all-cash transaction the companies have said will be expedited on the way to a shareholder vote by April. Including debt, the deal has an enterprise value of about $83 billion, or $27.75 per share.
Unlike Netflix, Paramount wants to acquire Warner’s entire company – including networks like CNN and Discovery – and went straight to shareholders with a US$77.9 billion cash offer in December.
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Paramount’s current offer for the entire company is worth US$108.4 billion, while Netflix is offering US$27.75 per share, or US$82.7 billion, for just its studios and streaming businesses.
Warner Bros. is scheduled to hold a special meeting on Friday and shareholders will vote on the Netflix merger on March 20. The company’s shares rose more than two percent before the market opened on Tuesday. Paramount Skydance shares climbed nearly three percent, while Netflix shares rose marginally.
