Warner Bros. Discovery announced that Paramount Skydance’s newest offer of $31 a share was a “superior proposal,” giving Netflix four business days to counter. However, Netflix declined to raise its $82.7 billion all-cash bid and will walk away from the deal.
Paramount’s renewed offer, backed by Oracle’s executive chair Larry Ellison, includes paying a $2.8 billion termination fee to Netflix to end the existing agreement. The new deal will see Paramount acquiring the entirety of Warner Bros. Discovery, including its studios, HBO, its streaming service, its games and entertainment divisions, and linear television networks like CNN.
Netflix co-CEOs Ted Sarandos and Greg Peters stated that the transaction they negotiated would have created shareholder value with a clear path to regulatory approval, but the deal is no longer financially attractive at the price required to match Paramount Skydance’s latest offer.
The Deal Details
Paramount will take on about $33 billion in debt held by Warner Bros. Discovery, with Larry Ellison agreeing to supply the additional equity to fulfill Paramount’s bid. The deal is also being financed by a $57.5 billion debt commitment from Bank of America Merrill Lynch, Citi, and Apollo Global Management.
Netflix shares jumped as much as 10% in after-hours trading in New York, while shares in Paramount were up 4.5%. The acquisition marks a significant move for Paramount, which was bought by David Ellison’s Skydance Media last year with heavy financial backing from his father, Larry Ellison.
Market Impact
The deal values Warner Bros. Discovery at about $111 billion, with Paramount’s market cap at about $12 billion. Larry Ellison’s net worth is $201 billion, according to Bloomberg, and he has agreed to supply the additional equity to fulfill Paramount’s bid.
What’s Next
David Ellison has warned of significant job cuts, and his ownership of news network CBS has attracted controversy. The acquisition is expected to have significant implications for the media and entertainment industry, with Paramount now owning major studios, entertainment, and news businesses.
