Netflix is offering Warner Bros. Discovery shareholders an all-cash deal valued at $72 billion, the companies said Tuesday, aiming to win over Warner investors as it tries to fend off a hostile bid from Skydance-owned Paramount.
The revised agreement replaces a previously announced Netflix-Warner deal that was structured as a cash-and-stock transaction. Under the earlier terms, Netflix had offered $27.75 per Warner share and the companies put the total enterprise value at $82.7 billion including debt. Netflix and Warner said Tuesday that they revised the transaction to simplify the structure, provide more certainty of value for Warner stockholders and speed up the path to a shareholder vote, which they said could arrive by April.
Under the new all-cash structure, the transaction is still valued at $27.75 per Warner share. Warner stockholders would also receive additional value in the form of shares of Discovery Global, which would become a separate public company following a previously announced separation from Warner Bros.
Warner leadership backed the revised deal, and the boards of both companies approved it. Warner CEO David Zaslav said the revised agreement “brings us even closer to combining two of the greatest storytelling companies in the world.”
Paramount, by contrast, declined to comment when reached by The Associated Press on Tuesday. The company has argued it wants to acquire Warner’s entire company—including assets such as CNN and Discovery—rather than limiting the transaction to Warner’s studio and streaming business.
Paramount went directly to shareholders last month with an all-cash $77.9 billion offer, and it told investors it plans to press forward with a proxy fight. Warner shareholders have until 5 p.m. ET Wednesday to tender their shares in support of Paramount’s bid, which has an enterprise value of $108 billion including debt, according to the report. The Wall Street Journal reported last week that Paramount was planning another extension of that tender deadline.
Beyond the tender offer, Paramount has promised to nominate its own slate of directors before Warner’s next shareholder meeting, but the meeting’s date has not been set.
The dispute has also spilled into Delaware Chancery Court. Paramount filed suit seeking to compel Warner to disclose to shareholders how it values its bid and the competing offer from Netflix. A judge denied Paramount’s request to expedite that proceeding on Thursday.
In response to the court ruling, Warner applauded the decision and called Paramount’s lawsuit “yet another unserious attempt to distract.” Paramount maintained that the ruling wasn’t about the merits of its allegations and said Warner shareholders “should ask why their Board is working so hard to hide this information.”
Both sides said they expect their own timeline for closing, but an extended process is likely. Netflix and Warner said they expect to close on a merger 12 to 18 months from the December agreement, while Paramount’s hostile bid could complicate the path to any deal.
Industry groups have warned that further consolidation in the media and entertainment business could lead to job losses and less diversity in content, with negative consequences for filmmaking. Netflix’s co-CEO Ted Sarandos said combining with Warner “will deliver broader choice and greater value to audiences worldwide” both at home and in theaters, adding that the deal would be “driving job creation and long-term industry growth.”
In trading Tuesday morning, Netflix’s stock inched up just under 1%, while shares of Warner Bros. Discovery and Paramount-Skydance fell slightly.