Warner Bros. Discovery has determined that Paramount Skydance’s latest bid is a “superior proposal”, prompting Netflix to walk away from the merger deal.
Paramount has raised its bid to buy the entirety of Warner Bros to US$31 per share from $30 per share in its latest amendments to its multiple offers and hostile bids to buy the company.
This came after Netflix granted Warner Bros a seven-day waiver to re-engage with Paramount, resulting in a higher bid.
Paramount’s offer is for the entirety of Warner Bros, including its pay-TV networks, such as CNN, TBS and TNT.
Netflix would have only bought the company’s studio and streaming business for $27.75 per share.
Warner Bros gave Netflix four business days to make changes to its bid, but instead decided walk away from the deal.
“The transaction we negotiated would have created shareholder value with a clear path to regulatory approval,” Netflix CEOs Ted Sarandos and Greg Peters said in a statement.
“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.”
In response, Warner Bros CEO David Zaslav wished Netflix the best for the future and said it was a “great company” and said Sarandos, Peters and Netflix CEO Spencer Neumann were “great partners” to the company.
“Once our Board votes to adopt the Paramount merger agreement, it will create tremendous value for our shareholders," Zaslav said.
"We are excited about the potential of a combined Paramount Skydance and Warner Bros. Discovery and can’t wait to get started working together telling the stories that move the world.”
Paramount’s new deal would also include a $7 billion breakup fee in the event that the proposed merger does not win regulatory approval.
The company also agreed to pay the $2.8 billion breakup fee that Warner Bros would owe Netflix if that deal didn’t go through.
At the time of writing, Paramount Skydance (NASDAQ: PSKY) stock was up 10.04% to $11.18.
Netflix (NASDAQ: NFLX) stock was up 2.29% to $84.59.
Warner Bros (NASDAQ: WBD) stock was down 0.35% to $28.80.
