Netflix has amended its proposal for Warner Bros Discovery to an all-cash proposal. The studio and streaming assets will be sold to the streaming company at a price of an amount of $27.75/share in cash. The updated deal maintains the same valuation as in the previous offer, but the structure is simplified, and the way to a shareholder vote is expedited.
The WBD board has revived its support. Directors said the cash offer gives shareholders greater certainty and that the board still recommends the Netflix transaction. Warner Bros Discovery will still spin off its global networks business as a separate company, and that part is not included in the sale.
All Cash Offer
Netflix argues that the all-cash structure makes closing faster and more certain. The company said the switch should allow WBD investors to vote on the deal as early as April. Netflix co-chief executive Ted Sarandos said the change helps speed a clear outcome for stockholders and for the businesses involved.
Paramount Skydance remains a rival bidder. Paramount has pursued a hostile all-cash offer for the whole of Warner Bros Discovery, and it has said its offer provides more cash per share. Paramount also filed a lawsuit and said it planned a proxy fight and nominations to the WBD board. A Delaware judge recently rejected one of Paramount’s legal moves.
Proxy Fight Threat
Paramount seeks to persuade enough investors to replace directors at the annual meeting. The company said it would nominate its own slate of directors, and it also proposed a bylaw change to require shareholder approval of the planned spinoff of the networks business. Warner Bros Discovery has said the Paramount offer is risky and that it would add a large amount of leverage.
Deal mechanics and fees are part of the calculus. Warner Bros Discovery would owe a breakup fee if it walked away from the Netflix agreement. Paramount raised its own termination fee to match the Netflix fee. WBD said accepting Paramount’s bid would still cost millions more because of debt costs and other penalties tied to changing course.
