Netflix has dropped out of the bidding war to acquire Warner Bros Discovery, paving the way for Paramount Skydance to proceed with its $US111 billion ($156 billion) deal. Netflix stated on Friday AEDT that while their negotiated transaction would have created shareholder value with a clear path to regulatory approval, the price required to match Paramount Skydance’s latest offer made the deal financially unattractive. Netflix is a subscription streaming service and production company. Paramount Skydance, led by David Ellison, will take control of the studio.
Following the announcement, Netflix shares jumped as much as 13 per cent in after-hours trading, suggesting investor approval of the decision to withdraw from the deal. Conversely, Warner Bros shares fell as investors no longer anticipated a bidding war. Paramount shares remained stable. Netflix initially inked an $US82.7 billion deal, including assumed debt, to acquire Warner Bros’ studio and streaming businesses in December.
Paramount’s offer includes Warner Bros’ cable-TV networks such as CNN and TNT. After an initial private offer in September, Paramount launched a campaign to regain the lead, including a tender offer for Warner Bros shares and threats of a proxy fight. Adjustments to the offer included personal guarantees on over $US40 billion in equity from Larry Ellison, chairman of Oracle Corp.
Paramount also promised Warner Bros $US2.8 billion to compensate Netflix for terminating their agreement and $US7 billion if regulatory approvals are not secured. The merger of Skydance Media with Paramount previously granted David Ellison control of the Paramount film studio, streaming service, and TV networks like CBS and MTV.
