Warner Bros. Discovery on Tuesday said Paramount Skydance increased its all-cash offer for the legacy media company, suggesting the revised bid may be superior to a potential Netflix takeover, extending the contest to acquire the Hollywood studio.
Netflix allowed the legacy media company to reopen talks with Paramount.
Key Facts
Paramount’s revised bid offered $31 per share for the entirety of Warner Bros. Discovery, up from $30 per share, in addition to a $7 billion break-up fee should a merger with Paramount fail to win regulatory approval and $2.8 billion for Warner Bros. Discovery to abandon its deal with Netflix, Warner Bros. Discovery said.
Paramount would also pay a “ticking fee”—a payment the buyer typically pays to a company after a deal is reached if closing is delayed—of $0.25 per share per quarter if its deal to acquire the company isn’t closed by Sept. 30.
Warner Bros. Discovery said the revised proposal from Paramount “could reasonably be expected” to beat Netflix’s $27.75-per-share agreement to buy the company’s studio and streaming businesses, but noted its board is still reviewing whether the offer is superior.
Netflix will have four days to improve its offer if Warner Bros. Discovery’s board backs Paramount’s revised bid.
Netflix did not immediately respond to a request for comment.
What to watch for
Whether Netflix sweetens its offer. Netflix co-CEO Ted Sarandos told Variety he would be “willing to walk away and let someone else overpay for things,” but added he would “not get ahead of that process” because Warner Bros. Discovery had yet to determine whether Paramount’s revised bid was superior. Sarandos has accused Paramount of “making a ton of noise, flooding the zone with confusion for shareholders.”
Key Background
Netflix, which reached an $83 billion deal in December to acquire Warner Bros. Discovery’s film and television studios and streaming businesses, granted the legacy media giant permission to reopen talks with Paramount last week. The streaming firm gave Warner Bros. Discovery seven days to “seek clarity” and allow Paramount to make its “best and final offer,” but argued its offer remained the “superior deal and only deal.” Paramount submitted a $108 billion hostile takeover bid for Warner Bros. Discovery shortly after Netflix’s deal was reached, and the company said its offer included financial backing from Larry Ellison, father of Paramount Skydance CEO David Ellison. Larry Ellison has an estimated net worth of $190 billion, making him the sixth-wealthiest person in the world.
This article was written by Ty Roush from Forbes and was legally licensed through the DiveMarketplace by Industry Dive. Please direct all licensing questions to legal@industrydive.com.