Warner Bros. To Accept Paramount Bid As Netflix Backs Out; Paramount, Netflix Stocks Up

(RTTNews) - Warner Bros. Discovery Inc. is gearing up towards accepting a superior all-cash proposal from Paramount Skydance Corp., after streaming video major Netflix Inc. dropped its bid to take over the media and entertainment giant. In the latest develpoment in the merger of majors, Netflix declined to raise its offer, stating that the deal, if revised to match Paramount Skydance's suprior proposal, will no longer be financially attractive.

Following the news, shares of Netflix and Paramount Skydance were gaining around 8.7 percent and 7.6 percent, respectively, in the pre-market activity, while Warner Bros. were losing around 2 percent.

It was in early December last year that Netflix announced its agreement to buy Warner Bros. for a total enterprise value of approximately $82.7 billion, or an equity value of $72.0 billion. The move followed the planned separation of Warner Bros. Discovery's Global Networks division into a new publicly-traded company.

Following the deal, US president Donald Trump, while talking to reporters, had stated that the streaming video giant's very big market share could be a problem in culminating the mega deal.

Soon after the Netflix- Warner Bros. deal announcement, Paramount launched a $30 per share all-cash takeover offer for Warner Bros., which was later revised following rejections.

However, Warner Bros earlier this week confirmed that it has received a revised all-cash proposal from Paramount, which its board has determined to be a "Superior Proposal" under its existing merger agreement with Netflix. Warner Bros. added then that the Netflix merger agreement remains in effect and the board continues to recommend the Netflix transaction at that time.

Paramount's revised offer values Warner Bros at $31.00 per share in cash and includes a daily ticking fee of $0.25 per share per quarter beginning after September 30, 2026, among others. The proposal also features a $7 billion regulatory termination fee and a commitment to pay the $2.8 billion breakup fee that Warner Bros. would owe Netflix if it terminates its current merger agreement.

Under the terms of the Netflix agreement, the determination triggers a four-business-day match period during which Netflix may revise its offer. If, after that period, the board determines Paramount's proposal remains superior, Warner Bros. would be entitled to terminate the Netflix deal.

In response to Warner Bros. notice regarding Paramount's latest superior proposal, Netflix confirmed that it has declined to raise its offer. The company stated that at the price required to match Paramount Skydance's latest offer, the deal is no longer financially attractive.

Netflix added, "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 added that its business is strong and growing organically, and that it plans to invest around $20 billion in quality films and series. The firm also aims to expand its entertaining offering, and to resume share repurchase program.

In the overnight trading Netflix shares gained around 9.4 percent, at $92.53 after closing Thursday's regular trading 2.3 percent higher. Warner Bros stock was down 1.84 percent, at $28.27, while Paramount stock was up 7.3 percent, at $11.99.

In the pre-market activity, Netflix shares are currently gaining 8.7 percent, trading at $91.97, while Warner Bros shares are down 2.1 percent, at $28.20, and Paramount shares are up 7.6 percent, at $12.03.