Stock markets continue to play to the tune of a bidding war between Netflix and Paramount Skydance for full ownership of the entertainment conglomerate Warner Bros Discovery.
As per an official press release, Warner Bros continues to reject Paramount’s offer of $30 per share at a valuation of $108.4 billion for all of its assets, including streaming businesses HBO and HBO Max.
Paramount Skydance has indicated that it can further sweeten the deal by raising its offer price if WBD is open to talks. An informal offer of $31 per share has been floated as well, indicating that too would not be its “best and final” proposal.
Currently, Netflix has an all-cash offer of $27.75 per share at an enterprise value of $82.7 billion, which will only go through after Warner Bros spins off its cable TV business, Discovery Global, into a separate publicly traded entity that will manage networks such as CNN, TLC, Food Network, and others, according to Reuters.
The deal by Netflix was initially a mix of equity and cash, but was converted later on to maintain its competitive offer.
WBD shareholders will make a final decision on March 20th on the Netflix deal in a special meeting.
Prior to WBD’s announcement of a potential deal with Netflix in December, Paramount had made multiple offers to WBD all of which were not accepted.
“Throughout the entire process, our sole focus has been on maximizing value and certainty for WBD shareholders,” said WBD’s president and CEO, David Zazlav.
“Every step of the way, we have provided PSKY with clear direction on the deficiencies in their offers and opportunities to address them. We are engaging with PSKY now to determine whether they can deliver an actionable, binding proposal that provides superior value and certainty for WBD shareholders through their best and final offer.”
WBD has mentioned multiple issues connected to Paramount’s offer, which prevent it from accepting, namely its approach to financing instruments such as bridge loans and a heavier reliance on debt financing instead of equity.
At the time of writing, Netflix shares were priced at $76.92, trading relatively even towards market close compared to its previous close of $76.87. WBD shares were priced at $28.88, up by 3.16%. Paramount Skydance was priced at $10.90, up by 5.57%.
“As announced today, we continue to believe the Netflix merger is in the best interests of WBD shareholders due to the tremendous value it provides, our clear path to achieve regulatory approval, and the transaction’s protections for shareholders against downside risk,” said WBD board chair Samuel A. Di Piazza.
“With Netflix, we will create a brighter future for the entertainment industry – providing consumers with more choice, creating and protecting jobs, and expanding U.S. production capacity while increasing investments to drive the long-term growth of our industry,”