In a flurry of multibillion-dollar deals, the bidding war for Warner Bros. Discovery over. David Ellison-owned Paramount to buy Warner Bros. Discovery.
On Thursday, Warner Bros. announced Discovery that Paramount Skydance’s newest offer of $31 per stock was a “superior proposal” that gave Netflix four business days to counter. Netflix then said it would not raise its $82.7 billion cash bid for the old studio and would walk away from the deal.
“The transaction we negotiated would have created shareholder value with a clear path to regulatory approval,” Netflix co-CEOs Ted Sarandos and Greg Peters said in a statement Thursday. “However, we have always been disciplined and at the price required to match Paramount Skydance’s latest offer, the deal is no longer financially attractive, so we decline to match the Paramount Skydance bid.”
Under the terms of the original agreement, Warner Bros. Discovery paid a $2.8 billion termination fee to Netflix to terminate the existing agreement. Paramount’s renewed offer – backed by the world’s sixth-richest person, Oracle executive and David Ellison’s father, Larry Ellison – includes payment of that break-up fee.
The new deal will see Paramount, which was bought last year by Ellison’s Skydance Media with heavy financial backing from his father, acquire all of Warner Bros. Discovery, including its studios, HBO, its streaming service, its gaming and entertainment divisions and linear television networks such as CNN, TBS, TNT, Discovery and HGTV.
Ellison, whose Paramount already owns major studios, entertainment and news companies, has warned of significant cuts. His ownership of the CBS news network has also attracted controversy and has been widely seen as a sympathetic turn toward the Trump administration, with reporting critical of the administration shelved or facing increased scrutiny by Ellison and CBS editor-in-chief, conservative provocateur Bari Weiss. Larry Ellison is a major donor and supporter of President Trump.
Netflix had announced its intention to acquire WBD in December, offering nearly $83 billion for its studios and streaming service alone. Despite several hostile takeover bids from Paramount, Warner Bros. confirmed Discovery told shareholders its belief that Netflix’s offer was superior to Paramount’s, which offered $108 billion for the entire company, including its linear television networks. Paramount’s latest bid, at $31 per share, valuing WBD at about $111 billion.
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According to the agreement, Paramount will assume the approximately $33 billion in debt that Warner Bros. Discovery has. Larry Ellison, whose net worth is $201 billion, according to Bloomberg, has agreed to provide the additional equity capital to meet Paramount’s bid. Paramount’s market cap is about $12 billion.
The deal is also financed by a $57.5 billion debt commitment from Bank of America Merrill Lynch, Citi and Apollo Global Management.
Netflix shares rose as much as 10% in after-hours trading in New York. Shares in Paramount rose 4.5 per cent.