Netflix revises Warner Bros bid to all-cash deal:Board backs deal as Paramount challenge fades

Netflix has amended its takeover proposal for Warner Bros Discovery’s studio and streaming business, shifting to a fully cash offer worth $82.7 billion without raising the price, a move that has won unanimous support from the Warner Bros board, Reuters reported on Tuesday. The revised structure is widely seen as an attempt by Netflix to neutralize rival bidder Paramount, which has been lobbying shareholders aggressively in recent weeks to argue that its offer represents better value. All-cash structure aims to end rival bidding Under the amended deal, Netflix will pay $27.75 per share in cash for Warner Bros’ film and television studios, its extensive content library and the HBO Max streaming service, according to a regulatory filing cited by Reuters. The new terms replace the earlier mix of cash and stock, which had become less attractive after a sharp fall in Netflix’s share price. Netflix shares have dropped nearly 15% since the merger was announced on December 5, closing at $88 on Friday, below the $97.91 floor price embedded in the original offer. Paramount had used this decline to bolster its argument that its competing bid offered greater certainty. Market reaction remains muted Following the announcement, Netflix shares rose 0.7% in premarket trading, while Paramount shares fell 1%. Warner Bros stock was little changed, Reuters reported, suggesting investors are largely awaiting further developments in the takeover battle. Netflix’s streaming business in India Netflix has strengthened its presence in India’s fast-growing streaming market through a mix of global content, Indian originals, and flexible pricing. After launching in 2016, the streamer faced early challenges due to high prices, but a price cut in 2021 and mobile-only plans helped boost growth, Reuters reported. India is now one of Netflix’s fastest-growing markets outside the US, with 16-22 million subscribers, according to industry estimates cited by Reuters. Increased investment in local-language films and series has helped Netflix expand viewership, even as competition from Disney-owned platforms and Amazon Prime Video remains intense. Paramount’s offer again rejected Both Netflix and Paramount are vying for Warner Bros because of its powerful entertainment assets, including blockbuster franchises such as “Game of Thrones,” “Harry Potter,” and DC Comics’ Batman and Superman, as well as its vast film and television library. However, Warner Bros has repeatedly dismissed Paramount’s proposals. The company said Paramount’s $30-per-share all-cash bid did not adequately compensate shareholders once “pricing, execution risks, costs and uncertainties” were taken into account, according to the filing cited by Reuters. Discovery global spin-off valuation disclosed Warner Bros also provided new details on the valuation of Discovery Global, a planned spin-off that will include cable television assets such as CNN, TNT Sports and the Discovery+ streaming platform, Reuters reported. Company advisers estimated the value of Discovery Global at $1.33 per share on the low end, assuming a uniform valuation, and up to $6.86 per share if the entity were to be involved in a future transaction. Paramount has argued that the cable spin-off embedded in Netflix’s proposal is effectively worthless. Court rejects paramount’s disclosure challenge Earlier this month, Paramount sought a fast-track ruling from a Delaware court to force additional disclosures, arguing investors needed more information to assess competing bids. The court rejected the request, saying Paramount failed to show it would suffer irreparable harm, Reuters reported. Paramount Skydance did not immediately respond to a Reuters request for comment. Balance sheet strength favours Netflix According to Reuters, Warner Bros said a merger with Netflix would leave the combined company with roughly $85 billion in debt, slightly lower than the $87 billion projected under a Paramount deal. Netflix’s investment-grade credit rating, lower leverage ratio of under four, and market valuation of about $402 billion were cited as key advantages over Paramount, whose bonds are rated below investment grade.