Highlights
- Netflix converts original cash-and-shares proposal to all-cash deal valued at $27.75 per share.
- All-cash structure enables accelerated stockholder vote as early as April, providing greater financial certainty.
- Paramount continues hostile takeover attempt, seeking to nominate directors and derail Netflix agreement.
Netflix has enhanced its $82.7bn (£61.5bn) offer for Warner Bros Discovery's (WBD) studios and streaming businesses by converting it to an all-cash deal, simplifying the transaction amid a hostile counter-bid from Paramount Skydance.
The streaming company originally secured unanimous backing from the WBD board last month with a cash-and-shares proposal valuing the business at $27.75 per share.
The two companies stated the switch to an all-cash offer at the same valuation "simplifies the transaction structure, provides greater certainty of value for WBD stockholders, and accelerates the path to a WBD stockholder vote".
Netflix said the revised offer would enable WBD investors to vote on the proposed deal as early as April.
Ted Sarandos, Netflix's co-chief executive, told The Guardian "Our revised all-cash agreement will enable an expedited timeline to a stockholder vote and provide greater financial certainty at $27.75 per share in cash, plus the value from the planned separation of Discovery Global."
He added "The WBD Board continues to support and unanimously recommend our transaction, and we are confident that it will deliver the best outcome for stockholders, consumers, creators and the broader entertainment community."
Assets included
Under the Netflix deal, the streaming company would acquire WBD's premium assets including Warner Bros studios, responsible for franchises such as Harry Potter, Superman and Batman, alongside HBO, home to programmes including Game of Thrones, The White Lotus and Succession.
When the deal completes, WBD investors will also receive shares in its global networks operation, including CNN, Cartoon Network and Discovery Channel, which is being spun off as a separate company as Netflix is not purchasing it.
Paramount's hostile challenge
Paramount Skydance is continuing its $108.4bn cash takeover bid for the entirety of WBD, taking the offer hostile to convince investors to override the board's Netflix agreement.
Last week, Paramount announced plans to nominate directors to WBD's board to vote against the Netflix deal and filed a lawsuit seeking financial disclosure related to the agreement. On Thursday, a Delaware court judge rejected Paramount's lawsuit.
Paramount aims to nominate directors for election at WBD's annual meeting, typically held in June, to derail the Netflix transaction through a proxy fight.
WBD's board has twice rejected the "inadequate" $108.4bn hostile bid, describing it as "the largest LBO (leveraged buyout] in history" and arguing the structure poses significant risks.
Under its Netflix agreement, WBD would pay a $2.8bn breakup fee if it withdrew. Paramount Skydance increased its termination fee to $5.8bn, matching Netflix.
However, WBD stated accepting Paramount's deal would incur $4.7bn in costs, including the Netflix breakup fee, additional debt interest and a $1.5bn fee for failing to complete a debt exchange.
