Netflix ups ante on Warner Bros buyout to all-cash deal

Netflix, when making an initial offer for Warner Bros, proposed a mixed cash-and-stock offer that priced shares at $27.75 each, implying an enterprise valuation of $82.7 billion when debt was included. However, that deal has been altered to be an all-cash transaction.

Under the revised terms, the transaction is an all-cash deal valued at $27.75 per Warner Bros share. In addition, Warner Bros shareholders will gain extra value through shares of Discovery Global once it is spun off from Warner Bros.

"Together, Netflix and Warner Bros. will deliver broader choice and greater value to audiences worldwide, enhancing access to world-class television and film both at home and in theaters," Ted Sarandos, CEO of Netflix, said in a statement. "The acquisition will also significantly expand U.S. production capacity and investment in original programming, driving job creation and long-term industry growth."

Warner Bros has already said it plans to split Warner Bros and Discovery Global into two independently listed public companies. That separation is expected to be finalized within six to nine months and will take place before the Netflix and Warner Bros transaction closes. The merger with Netflix is anticipated to be completed 12 to 18 months after the companies first signed their merger agreement.

The updated all-cash transaction has received approval from the boards of both Netflix and Warner Bros Discovery, and the all-cash transaction will give more certainty to the acquisition. 

Netflix is competing with Paramount Skydance for control of Warner Bros, as Paramount has escalated a hostile bid to acquire the entity last week by announcing plans to nominate its own directors ahead of the studio’s next shareholder meeting.

Paramount has also filed a lawsuit in Delaware Chancery Court, asking the court to force Warner Bros to disclose how it assesses Paramount’s proposal compared with Netflix’s competing offer.

Warner Bros executives have consistently turned away Paramount’s advances and have encouraged shareholders to support the sale of the company’s streaming and studio assets to Netflix. At the same time, Paramount has sought to improve its $77.9 billion bid for the company.