As the ongoing battle for the future of Warner Bros. Discovery escalates, Netflix has now declared its readiness to offer an all-cash payment for Warner Bros. and HBO, moving away from its prior proposal involving a mix of cash and stock.
Netflix and Warner Bros. Discovery, or WBD, unveiled this revised arrangement on Tuesday morning, roughly six weeks subsequent to the initial agreement on the mega-deal intended to reshape the entertainment sector.
The companies reportedly hope that this completely cash-based updated offer will serve to fend off Paramount’s hostile takeover attempt targeting all of WBD.
Netflix is proposing a figure of \$27.75 per WBD share for the film studio and the company’s streaming assets, which are earmarked to be spun off into a new publicly traded entity named Warner Bros. later this year.
CNN and other networks under WBD ownership will become part of a separate corporation to be called Discovery Global.
Previously, Netflix had put forth an offer consisting of \$23.25 per share in cash, with the remainder to be settled in Netflix stock, a structure that had emboldened Paramount to argue their all-cash bid was superior.
On Tuesday, Netflix stated that the transaction’s funding would be secured “through a combination of our available cash, committed credit facilities, and financing commitments.”
A joint press release from the companies noted that this “simplifies the transaction structure, provides greater certainty on the value for WBD shareholders, and accelerates the path toward a WBD shareholder vote.”
WBD CEO David Zaslav indicated on Tuesday that following the completion of the U.S. Securities and Exchange Commission review process, WBD will convene a special meeting of its shareholders to vote on the deal. He anticipates this will take place in the spring.
Paramount had been anticipating a cash-only revision and is maintaining its strategy to acquire shares at \$30 apiece. Earlier this month, Paramount CEO David Ellison also threatened a proxy fight, pledging to install a board slate friendly to Paramount to take the helm at WBD.
WBD has dismissed Paramount’s advances, maintaining that the deal with Netflix and the establishment of Discovery Global place investors in a more advantageous position.
Samuel A. Di Piazza Jr., WBD’s Chairman of the Board, commented Tuesday morning: “By moving to an all-cash consideration, we are now able to deliver the incredible value of our combination with Netflix with even greater certainty, while also providing shareholders the option to participate in management’s strategic plans to realize the value of Discovery Global’s iconic brands and global reach.”
In contrast, Paramount contends that the networks possess minimal to no intrinsic capital value.
Earlier in the month, Paramount initiated a lawsuit in Delaware seeking further diligence regarding the valuation, so that, as Ellison stated, “WBD shareholders have everything they need to make an informed decision on whether to tender their shares into our offer.”
However, the court rejected Paramount’s efforts to fast-track the legal proceedings.
Netflix is scheduled to report its quarterly earnings following the market close on Tuesday.
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