Netflix Backs Out as Bid Rises…Shares Surge by 10%
Netflix: “Not a Deal We Absolutely Have to Make…Price Not Attractive”
According to E-Daily reporter Kim Gyeo-re, Netflix has withdrawn from acquiring Warner Bros. Discovery. Paramount Skydance will acquire Warner Bros. for $111 billion (approximately 159 trillion won).
On the 26th (local time), Netflix Co-CEOs Ted Sarandos and Greg Peters announced that they would not proceed with acquiring Warner Bros., citing that the price is no longer attractive compared to Paramount’s proposal.
Following the decision to withdraw from the Warner Bros. acquisition, Netflix’s shares rose by over 10% in after-hours trading.
Netflix stated, “This deal was a ‘nice to have’ at an appropriate price, but not a ‘must-have’ at any price.”
With Paramount raising its acquisition price from $30 to $31 per share for Warner Bros., Netflix deemed it unfeasible to acquire Warner Bros. at a higher price. Previously, Paramount had proposed acquiring the entirety of Warner Bros., including its cable TV network.
Last December, Netflix had signed an agreement to acquire Warner Bros.’ assets, excluding its cable TV network, for $27.75 per share.
However, as Paramount pursued a hostile takeover and raised its offer, the Warner Bros. board determined that Paramount’s proposal was more favorable to shareholders than the contract with Netflix.
Netflix had the right to make a new offer within four business days but decided to withdraw. Paramount will be responsible for the penalty payment Warner Bros. would have incurred due to contract breach with Netflix. Additionally, Paramount promised to pay a $7 billion (approximately 10 trillion won) compensation if regulatory authorities do not approve the merger with Warner Bros.
As a result, Paramount, less than a year after merging with Skydance, a company founded by David Ellison, son of Oracle founder Larry Ellison, in 2006, has acquired the century-old major media company Warner Bros. Skydance merged with Paramount Global last year, which owns popular cable channels like CBS, MTV, Nickelodeon, and Comedy Central.