Netflix is reportedly making changes to its offer to acquire Warner Bros. Discovery, opting for an all-cash deal instead of a combination of cash and stock. The original agreement had each Warner Bros. Discovery shareholder receiving $23.25 in cash and $4.50 worth of Netflix common stock for each share of WBD common stock. This deal had an enterprise value of $82.7 billion.
According to the Wall Street Journal, Netflix is now preparing to present an all-cash offer for the acquisition. This decision comes as Paramount Skydance, led by David Ellison, continues to push its $30/share all-cash hostile bid as a better option for shareholders than Netflix’s proposal. Paramount recently filed a lawsuit seeking more transparency on the financial details of the Netflix deal, including how WBD is valuing the proposed Discovery Global cable TV networks spin-off.
Shares of Netflix have seen a decline of more than 12% since the announcement of the Warner Bros. deal, falling below the agreed-upon price set in the original terms. This has prompted Paramount Skydance to argue that the total value of the Netflix transaction to WBD shareholders is now lower than initially projected.
Under the proposed deal, Netflix would acquire Warner Bros. film and television studios, HBO and HBO Max, and its games division. The original bid included $59 billion in debt financing from financial institutions such as Wells Fargo, BNP, and HSBC.
On the other hand, Paramount Skydance is offering to purchase Warner Bros. Discovery entirely, with support from Oracle co-founder Larry Ellison and other partners like RedBird Capital Partners and sovereign wealth funds from Saudi Arabia, Qatar, and Abu Dhabi.
As the battle for Warner Bros. Discovery continues between Netflix and Paramount Skydance, shareholders and industry experts are closely watching to see how the situation unfolds. The decision to shift to an all-cash offer by Netflix could potentially impact the outcome of the acquisition deal.
