Netflix has declined to submit an increased offer for Warner Bros. Discovery, hours after the latter company’s board announced that Paramount Skydance’s new takeover bid represents a “superior proposal.”
The streaming service’s refusal to engage in a bidding war significantly increases the likelihood that Paramount Skydance’s takeover bid will be accepted.
In a statement to Variety, Netflix co-CEOs Ted Sarandos and Greg Peters said: “Netflix, Inc. today announced that it has declined to raise its offer for Warner Bros. Netflix had earlier received notice from Warner Bros. Discovery (WBD) that its Board of Directors has determined Paramount Skydance’s (PSKY) latest proposal constitutes a ‘Superior Proposal’ under the terms of WBD’s existing merger agreement with Netflix.”
They continued: “The transaction we negotiated would have created shareholder value with a clear path to regulatory approval.
“However, we’ve always been disciplined, and at the price required to match Paramount Skydance’s latest offer, the deal is no longer financially attractive, so we are declining to match the Paramount Skydance bid.
“Warner Bros. is a world-class organization, and we want to thank David Zaslav, Gunnar Wiedenfels, Bruce Campbell, Brad Singer and the WBD Board for running a fair and rigorous process. We believe we would have been strong stewards of Warner Bros.’ iconic brands, and that our deal would have strengthened the entertainment industry and preserved and created more production jobs in the U.S. But this transaction was always a ‘nice to have’ at the right price, not a ‘must have’ at any price.
“Netflix’s business is healthy, strong and growing organically, powered by our slate and best-in-class streaming service. This year, we’ll invest approximately $20 billion in quality films and series and will expand our entertaining offering.
“Consistent with our capital allocation policy, we’ll also resume our share repurchase program. We will continue to do what we’ve done for more than 20 years as a public company: delight our members, profitably grow our business, and drive long-term shareholder value.”
Warner Bros. Discovery’s decision to back the Paramount Skydance big represents a dramatic about-turn.
For months, the owner of HBO Max, DC Studios, and popular franchises including the Harry Potter films had publicly backed Netflix’s proposal.
However, following an enhanced bid from Skydance-owned Paramount, which now offers $31 per share for the entire company alongside other revisions, Warner’s board declared their new preference on Thursday.
Paramount CEO David Ellison expressed his satisfaction, stating: "We are pleased WBD’s Board has unanimously affirmed the superior value of our offer, which delivers to WBD shareholders superior value, certainty and speed to closing."
