Netflix has sweetened its $82.7bn (£61.5bn) offer for the studios and streaming businesses of Warner Bros Discovery (WBD) by making it an all-cash deal, streamlining its potential completion in the face of a hostile bid from Paramount Skydance.
The streaming company had originally secured the unanimous backing of the WBD board last month with a cash-and-shares proposal that valued the business at $27.75 a share.
The two companies said the switch to an all-cash offer – a plan first reported last week – at the same valuation as the original deal “simplifies the transaction structure, provides greater certainty of value for WBD stockholders, and accelerates the path to a WBD stockholder vote”.
Netflix said the offer would enable WBD investors to vote on the proposed deal as soon as April. “Our revised all-cash agreement will enable an expedited timeline to a stockholder vote and provide greater financial certainty at $27.75 per share in cash, plus the value from the planned separation of Discovery Global,” said Ted Sarandos, the streamer’s co-chief executive.
“The WBD board continues to support and unanimously recommend our transaction, and we are confident that it will deliver the best outcome for stockholders, consumers, creators and the broader entertainment community.”
When the deal goes through, investors in WBD will also receive shares in its global networks operation, including CNN, the Cartoon Network and the Discovery Channel, which is being spun off as a separate company as Netflix is not buying it.
During an earnings call on Tuesday, Sarandos echoed his optimism, saying: “We’re working really hard to close the acquisition of Warner Bros Studios and HBO, which we see as a strategic accelerant.”
He added that Netflix had begun the regulatory process, and believed it would secure government approval.
Paramount is continuing to pursue its own $108.4bn cash takeover of the whole of WBD, which it has taken hostile to try to get investors to accept and override the board’s agreement with Netflix.
Last week, Paramount said it planned to nominate directors to WBD’s board to vote against the approval of the Netflix deal, and filed a lawsuit seeking disclosure of financial information related to the agreement. On Thursday, a judge at a Delaware court rejected Paramount’s lawsuit.
Paramount wants to nominate directors for election at WBD’s annual meeting, which is usually held in June, to try to derail the Netflix deal.
To win what is known as a proxy fight, Paramount will have to convince enough WBD investors to cast their votes in favour of its nominees and replace existing, or new, directors proposed by WBD’s board.
Paramount has also said it intends to propose an amendment to WBD’s bylaws to require shareholder approval for the proposed spin-off of the global networks business.
Under the Netflix deal, the streaming company is poised to take control of WBD’s prize assets such as Warner Bros, the studio behind franchises including Harry Potter, Superman and Batman, as well as HBO, home to shows including Game of Thrones, The White Lotus, and Succession.
WBD’s board has twice told shareholders to reject the “inadequate” $108.4bn hostile takeover bid, calling it the “largest LBO [leveraged buyout] in history” and arguing that the structure poses risks to the offer.
Under the terms of its deal with Netflix, WBD would have to pay a $2.8bn breakup fee if it walked away from the agreement. Paramount Skydance’s revised offer also involved increasing its termination fee to $5.8bn, matching Netflix.
However, WBD said if it were to accept the deal with Paramount it would incur $4.7bn in costs, including the breakup fee to Netflix, additional interest on debt and a $1.5bn fee for failing to complete a debt exchange.
After Wall Street closed on Tuesday, Netflix announced it had surpassed 325 million subscribers in its latest quarterly earnings release, bolstered by the return of hit shows including Stranger Things and Nobody Wants This.
It projected annual revenue at between $50.7bn and $51.7bn for 2026. The low end of this forecast fell below analysts’ estimates of $51bn. Shares in the group dropped 6.5% during out-of-hours trading.
