Netflix waives a purchase contract Warner Bros. Discovery’s Studio and streaming assets after the WBD board on Thursday accepted a revised offer from Paramount Skydance be a superior offer.
Earlier this week, Paramount increased his offer to purchase the entire WBD for $31 per share, rather than $30 per share, all in cash. It was the latest change to Paramount’s numerous offerings in recent months – and since further development with a hostile offer to buy the company — and a deal between WBD and Netflix that called for the sale of the legacy media company’s studio and streaming businesses for $27.75 per share has now been canceled.
Last week, Netflix granted WBD one Seven day waiver to contact Paramount again, which resulted in a higher bid. Paramount’s offer applies to all of WBD, including its pay-TV networks such as CNN, TBS and TNT.
Netflix had four business days to make changes to its own proposal given Paramount’s superior offer, the WBD board said in a statement Thursday.
Instead, the streaming giant’s decision to withdraw marks a turning point in a long-running saga that has seen both bidders change their offers.
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Netflix shares rose 10% in extended trading on Thursday, while Paramount shares rose 5%. Shares of Warner Bros. Discovery fell 2%.
“The transaction we negotiated would have created value for shareholders with a clear path to regulatory approval,” Sarandos and Peters said in one opinion. “However, we have always been disciplined and at the price required to match Paramount Skydance’s latest offer, the deal is no longer financially attractive, so we decline to follow Paramount Skydance’s offer.”
Paramount’s latest offer included a $7 billion breakup fee in the event the proposed merger fails to receive regulatory approval. The company also agreed to pay the $2.8 billion breakup fee that WBD would owe Netflix if the deal falls through.
Sarandos told CNBC’s Julia Boorstin in an interview last week that Netflix granted WBD a waiver to resume Paramount talks to provide clarity to shareholders.
“Paramount has been making a lot of noise and flooding the zone with confusion for shareholders … including making all these hypothetical offers, talking directly to shareholders and bypassing the Warner Bros. Discovery board,” Sarandos said at the time. “So we have given these shareholders the opportunity to get exactly what they deserve, which is complete clarity and certainty.”
However, Sarandos had failed to comment on whether Netflix would increase its own offer to match a revised offer from Paramount.
And Thursday, Sarandos attended meetings at the White House to discuss the possible merger.
“Warner Bros. is a world-class organization, and we would like to thank David Zaslav, Gunnar Wiedenfels, Bruce Campbell, Brad Singer and the WBD Board of Directors for conducting a fair and rigorous process,” Netflix’s co-CEOs said in their statement.
“We believe we would have been strong stewards of Warner Bros.” “We have aligned ourselves with iconic brands and our deal would have strengthened the entertainment industry and retained and created more manufacturing jobs in the U.S.,” they said. “But this transaction was always a ‘nice to have’ at the right price, not a ‘must have’ at any price.”
