Netflix pulls out of Warner Bros acquisition bid

Netflix has decided not to increase its US$82.7 billion all-cash bid for Warner Bros. Discovery, ending its pursuit of the company.

Warner Bros. Discovery said Paramount, acquired last year by David Ellison’s Skydance Media with backing from Larry Ellison, made a US$31 per share offer, which Warner Bros. Discovery called a “superior proposal.”

The deal will see Paramount acquire Warner Bros. Discovery’s assets, including its studios, HBO, its streaming service, CNN, and other entertainment divisions, while taking on about US$33 billion in debt.

Warner Bros. Discovery is obligated to pay Netflix a US$2.8 billion termination fee, which Paramount’s offer includes covering.

The bid is backed by equity from Larry Ellison and a US$57.5 billion debt commitment from Bank of America Merrill Lynch, Citi, and Apollo Global Management.

Netflix shares rose as much as 10% in after-hours trading, while Paramount’s shares increased by 4.5%.

The transaction remains subject to regulatory approvals.

🔗 Source: TechCrunch

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Implications, context, and why it matters.

Paramount won over directors with a cleaner deal and clearer financing

Netflix’s first proposal split Warner Bros. Discovery, buying its streaming and studio units while moving the linear cable networks into a new company called Discovery Global 1.
Paramount, bought last year by David Ellison’s Skydance Media with funding from Larry Ellison, offered $31 per share. Warner Bros. Discovery called it a superior proposal. The plan paid cash for Warner Bros. Discovery’s assets, though it still needs conditions and approvals 2.
Paramount also agreed to pay the $2.8 billion termination fee Warner Bros. Discovery would owe Netflix if it ends the Netflix merger agreement. The package includes equity from Larry Ellison plus a $57.5 billion debt commitment from Bank of America Merrill Lynch, Citi, and Apollo Global Management, which reduced doubts about funds at closing 2.

Market reaction underscored Netflix caution and Paramount risk

Netflix shares climbed as much as 10% after hours after it declined to increase its price. Investors treated that as restraint, which fits Netflix’s track record as a disciplined acquirer that saw Warner Bros. Discovery as optional 3.
For Paramount, the purchase would add Warner Bros. Discovery’s studios, HBO, its streaming service, CNN, and other entertainment divisions. It would also assume about $33 billion in debt 3.
Paramount shares gained 4.5% after the bid, yet regulatory reviews remain pending. That leaves a deal risk neither company controls 3.