Netflix backs out of Warner Bros bidding war after Paramount made 'superior' offer
Netflix dropped its bid to buy Warner Bros. after the studio announced Paramount's latest bid to buy the entire company was "superior."
"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," Netflix co-CEOs Ted Sarandos and Greg Peters said in a statement.
"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.
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"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."
Zaslav, Warner Bros. Discovery's CEO, said, "We are excited about the potential of a combined Paramount Skydance and Warner Bros. Discovery and can’t wait to get started working together telling the stories that move the world."
Earlier in the day, Warner Bros. Discovery said Paramount's latest offer was "superior."
"Warner Bros. Discovery, Inc. today announced that its board of directors, following consultation with its independent financial and legal advisors, has determined that the previously disclosed proposal from Paramount Skydance Corporation constitutes a 'Company Superior Proposal' as defined in WBD’s merger agreement with Netflix, Inc." the company said in a press release.
Paramount's revised offer raises WBD's value to $31 per share, putting the company's valuation at $111 billion. Paramount would additionally pay the $2.8 billion termination fee that would go to Netflix if WBD backs out of their deal.
"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," Paramount CEO David Ellison said in a statement.
Ellison's billionaire father, Larry Ellison, is personally backing Paramount's bid, committing $45.7 billion in equity through the Ellison Trust, while Bank of America Merrill Lynch, Citi and Apollo will provide a $57.5 billion debt commitment.
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In December, Warner Bros. announced it had reached a deal with Netflix to buy the Hollywood studio and HBO for $83 billion, prompting Paramount to launch a $108 billion hostile takeover bid for the entire company, including all of its cable assets like CNN, which would have been spun off into a separate company under the Netflix deal.
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Both the Paramount and Netflix bids for Warner Bros. sparked panic across the entertainment industry.
Critics of the Paramount bid fear putting two legacy studios under one company would lead to mass layoffs and worry about Ellison taking over CNN, while critics of Netflix are concerned about the streaming giant's growing influence and whether it will commit to theatrical windows for film releases in support of movie theaters.