To enhance the interests of Warner Bros. Discovery (WBD) shareholders, Netflix is now offering cash for the company’s stock, amending its previous cash and stock deal with the WBD board.
However, the streaming giant is still offering WBD’s movie studio and streaming assets the same $27.75 the companies agreed to, leaving the deal valuing the company at $82.7 billion.
The companies said in a statement Tuesday that the new proposal would simplify the deal structure, “increase value certainty” and shorten the timeline for shareholder votes. Netflix said it would finance the deal with cash, debt and “committed financing.”
The changes come as rival suitor Paramount Skydance ramps up efforts to lure WBD shareholders with an all-cash, $30-per-share offer for the entire company, including securing a $40 billion guarantee from Oracle co-founder Larry Ellison, CEO David Ellison’s billionaire father.
Paramount has been trying to buy Warner Bros. Discovery for months, and last week announced it would sue the company for more information about Netflix’s offer and name a new member to Warner Bros. WBD rejected the offer and then submitted it to the board. The company also sought to expedite the lawsuit, but the court rejected that effort.
Meanwhile, Netflix has so far enjoyed the full support of the WBD board, which has stuck to its original cash and stock offer and firmly rejected Paramount’s bid. WBD argued that a sale to Netflix would be a better deal because the streaming giant has the capital to pay, and said the deal with Paramount posed “significantly greater risk” as it would leave the combined company with $87 billion in debt.
Warner Bros. also argued that increasing debt by this amount would further worsen Paramount’s current “junk” credit rating, questioned Paramount’s ability to function after the deal closed, and raised concerns that Paramount’s negative free cash flow would be further exacerbated by the deal.
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In October, WBD announced that it was considering a sale after receiving unsolicited interest from multiple parties. The company, valued at more than $45 billion at the time, was billions of dollars in debt and has struggled amid declining cable TV viewership and increasing competition from streaming rivals like Netflix. The streaming giant quickly rose to the top after winning a bidding war with Paramount and Comcast.
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