Netflix Switches to Cash Offer for Warner Bros, Aiming to Close Door on Paramount

Netflix has shifted to an all-cash offer for Warner Bros Discovery’s (WBD) studio and streaming assets, keeping the $82.7 billion valuation the same, in a strategic move to block rival Paramount Skydance from acquiring the Hollywood giant.

The new offer values WBD at $27.75 per share and has received unanimous support from Warner Bros’ board, according to a Tuesday regulatory filing.

The switch from a previous cash-and-stock deal is designed to simplify the merger and provide shareholders with “greater certainty of value,” Netflix co-CEO Ted Sarandos said in a statement.

“Our revised all-cash agreement will enable an expedited timeline to a stockholder vote and provide greater financial certainty,” he added. Warner Bros is expected to hold a special investor meeting by April to vote on the deal.

Paramount has been aggressively pursuing Warner Bros, offering $30 per share in cash and engaging in a media campaign to promote its bid.

However, Warner Bros has rejected the offer, citing higher risks and additional debt compared with Netflix’s proposal.

Netflix’s all-cash deal would leave the combined company with about $85 billion in debt, slightly lower than the $87 billion Paramount’s plan would carry, while also benefiting from Netflix’s investment-grade credit rating, TechCrunch reported.

“This new agreement only ramps up the pressure,” said Alex Fitch, portfolio manager for Harris Oakmark, a major Warner Bros investor

“The accelerated shareholder vote means Paramount needs to act with urgency. Now, it is up to Paramount to provide a clearly superior offer if they want to get this done.”

Netflix Simplifies Warner Bros Deal

Analysts say the cash offer is appealing because it removes uncertainty from the merger, even as regulatory scrutiny remains.

According to Reuters, Netflix’s prior bid, which combined cash and stock, has lost value due to declining Netflix shares, which fell almost 15% since the deal was first announced in December.

The all-cash move simplifies the structure and reassures investors that they will receive immediate liquidity upon closing.

Warner Bros’ board also highlighted the separate valuation of Discovery Global, its planned cable and streaming spin-off, as an additional benefit for shareholders under the Netflix deal.

Paramount Skydance’s tender offer expires on January 21, but the company’s court efforts to access additional information about Warner Bros’ assets were rejected, limiting its ability to sway shareholders.

Analysts expect the final outcome will hinge on investor evaluation of Netflix’s financial stability and the value of Discovery Global assets.

Originally published on vcpost.com