Warner Bros Discovery (WBD) has announced that its Board of Directors has determined that the revised proposal from Paramount Skydance Corporation “could reasonably be expected to lead to a ‘Company Superior Proposal’ as defined in WBD’s merger agreement with Netflix”.

The revised proposal includes an increased purchase price of $31 per WBD share in cash – an improvement on its initial $30 tender –  plus a daily ticking fee equal to $0.25 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 agreement; an obligation 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 business.

The Board noted that it has not made a determination as to whether the revised Paramount proposal is superior to the merger with Netflix. WBD will now “engage further” with Paramount to determine if a proposal that constitutes a ‘Company Superior Proposal’, as defined in the Netflix merger agreement, can be reached. In the event that the Board ultimately determines such a ‘Company Superior Proposal’ has been received, Netflix will have four business days to negotiate with WBD and to propose any revisions to the Netflix transaction.

Netflix has seemingly been WBD’s preferred bidder over recent weeks, and has signed an agreement with WBD after it boosted its offer to $27.75 cash per WBD share. The competing offers, however, are for slightly different things. Paramount wants to acquire the entirety of WBD, not just the studios and HBO business that Netflix is seeking.

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Categories: Articles, Business, M&A

Tags: netflix, paramount, WBD