Netflix declines to pursue Paramount Skydance's bid to acquire Warner Bros.

Investing.com - Netflix (NASDAQ:NFLX) announced on Thursday that after Warner Bros. confirmed that Paramount Skydance Corp (NASDAQ:PSKY)'s latest proposal constitutes a better offer under its existing merger agreement with Netflix, Netflix will not increase its acquisition bid for Warner Bros. Discovery Inc (NASDAQ:WBD).

Netflix Co-CEOs Ted Sarandos and Greg Peters stated in a release that although the negotiated deal could create shareholder value and has a clear regulatory approval path, the financial attractiveness of the deal no longer exists when considering the price needed to match Paramount Skydance’s latest offer.

“We have maintained discipline, and given the price required to match Paramount Skydance’s latest offer, the deal is no longer financially attractive, so we are declining to pursue Paramount Skydance’s bid,” Sarandos and Peters said.

The Warner Bros. Discovery board made this decision after consulting with its independent financial and legal advisors. The company disclosed on Monday that Paramount Skydance’s proposal includes a cash purchase price of $31.00 per WBD share, plus a daily incremental fee starting after September 30, 2026, equivalent to $0.25 per share per quarter.

Paramount Skydance’s proposal also includes a $7 billion regulatory termination fee, payable by PSKY if the deal fails to close due to regulatory issues. PSKY will also pay a $2.8 billion termination fee, which is the amount WBD would have paid to terminate its existing merger agreement with Netflix.

Larry J. Ellison and related trusts are obligated to provide additional equity financing to meet the solvency requirements demanded by PSKY’s lenders. The proposal includes a definition of a material adverse effect that excludes the performance of WBD’s global linear networks division.

Netflix thanked Warner Bros. Discovery CEO David Zaslav, CFO Gunnar Wiedenfels, Bruce Campbell, Brad Singer, and the WBD board for conducting a fair and rigorous process. The streaming company stated that it could have been a strong manager of the Warner Bros. brand, and that the deal could have strengthened the entertainment industry and preserved and created more production jobs in the U.S.

Netflix said that the deal has always been a bonus at the right price rather than an essential move at any cost. The company noted that its business remains healthy, strong, and organically growing, driven by its content lineup and streaming services. Netflix plans to invest about $20 billion in movies and series this year and expand its product offerings. The company will also resume its share repurchase program.

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