In the latest twist in the battle for control of Warner Bros Discovery (WBD), its Board of Directors, following consultation with its independent financial and legal advisors, has determined that the previously disclosed proposal from Paramount Skydance constitutes a ‘Company Superior Proposal’ as defined in WBD’s merger agreement with Netflix.

Netflix has now consequently walked away from any potential deal.

As disclosed by WBD on February 24th , Paramount’s proposal includes a purchase price of $31 per WBD share in cash, plus a daily ticking fee equal to $0.25 per share per quarter beginning after September 30th, as well as a $7 billion regulatory termination fee payable by Paramount in the event the transaction does not close due to regulatory matters, payment by Paramount of the $2.8 billion termination fee that WBD would be required to pay to Netflix to terminate the existing Netflix merger agreement, an obligation of Larry J. Ellison and an associated trust to contribute additional equity funding to the extent needed to support the solvency certificate required by Paramount’s lending banks, and a ‘Company Material Adverse Effect’ definition that excludes the performance of WBD’s Global Linear Networks segment.

WBD had notified Netflix of its decision that the Paramount proposal constitutes a ‘Company Superior Proposal’. Under the terms of the Netflix merger agreement, this notice triggered a four business day period during which the streaming giant had the right to propose revisions to its offer – but Netflix has said it will not return with another offer.

“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. “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.”

“Warner Bros is a world-class organisation, and we want to thank David Zaslav, Gunnar Wiedenfels, Bruce Campbell, Brad Singer and the WBD Board for running a fair and rigorous process. We believe we would have been strong stewards of Warner Bros’ iconic brands, and that our deal would have strengthened the entertainment industry and preserved and created more production jobs in the US. But this transaction was always a ‘nice to have’ at the right price, not a ‘must have’ at any price,” the pair added.

“Netflix’s business is healthy, strong and growing organically, powered by our slate and best-in-class streaming service. This year, we’ll invest approximately $20 billion in quality films and series and will expand our entertainment offering. Consistent with our capital allocation policy, we’ll also resume our share repurchase programme. We will continue to do what we’ve done for more than 20 years as a public company: delight our members, profitably grow our business, and drive long-term shareholder value,” concluded the statement.

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Categories: Business, Headline, M&A

Tags: Larry Ellison, Paramount Skydance, warner bros discovery, WBD