Netflix exits Warner Bros deal opening doors for rival Paramount

Netflix has announced that it will not raise its offer to acquire Warner Bros. Discovery, clearing the way for a rival bid from Paramount Skydance to proceed.

Warner Bros. Discovery said its board had determined that Paramount Skydance’s latest proposal constituted a “Superior Proposal” under the terms of its existing merger agreement with Netflix. Netflix had four business days to match the revised offer, but declined.

In a statement, Netflix co-chief executives Ted Sarandos and Greg Peters said, “The transaction we negotiated would have created shareholder value with a clear path to regulatory approval. 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.”

The executives thanked Warner Bros. Discovery leadership for “running a fair and rigorous process,” and said, “But this transaction was always a ‘nice to have’ at the right price, not a ‘must have’ at any price.”

Paramount’s revised proposal offered $31 per share, up from $30, along with a $7 billion regulatory termination fee if the merger is not approved and a quarterly 'ticking fee' of about $650 million in cash beginning after September.

The acquisition would give the buyer control of Warner Bros.’ film studio and media networks, in a deal valued at about $111 billion, potentially reshaping the entertainment industry.