The months-long bidding war between Netflix and Paramount has finally come to a close after Netflix publicly declined to raise its offer to match Paramount’s on Thursday.
“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,” said co-CEOs Ted Sarandos and Greg Peters in an official statement.
“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,”
The update comes after a long-drawn-out scrap between two of the biggest names in the U.S. entertainment industry, which saw multiple adjustments in the dealmaking process, interference from Trump due to monopoly concerns, and speculation on the various implications a deal of such magnitude would have for the entertainment industry.
Morningstar CFA analyst Matthew Dolgin wrote on Friday that $31 per share was a right move for Paramount, but not an offer that Netflix should match, agreeing with the streaming company’s sentiment echoed above. He argued that at that price point, Paramount’s business would greatly benefit from the acquisition and that Netflix would be overpaying, considering its own business is “extraordinarily strong,”
WBD re-opened negotiations with Paramount Skydance after Netflix granted a 7-day waiver, giving it leeway to tweak its deal from $30 to $31 per share. If the deal goes through, Netflix will receive a termination fee of $2.8 billion, an amount that Paramount Skydance is to pay.
As of now, here’s how the two offers stand
Netflix
Enterprise value of deal: $82.7 billion
Equity value of deal: $72 billion
Price offer for each share of WBD: $27.75
Deal mix: All cash (Initially a mix of cash and equity)
Paramount’s final offer
Enterprise value of deal: $111 billion (up from $108.4 billion)
Price offer for each share of WBD: $31
Deal mix: All cash