Netflix announced on Thursday that it is retracting its bid to acquire Warner Bros. Discovery’s streaming and studio assets, citing a lack of financial attractiveness following Paramount Skydance’s revised offer of $31 per share for the Hollywood studio. After Paramount’s increased bid, Netflix shares surged by approximately 10% in after-hours trading.
“We’ve always maintained financial discipline, and given the revised offer from Paramount Skydance, matching their bid is no longer financially viable for us,” stated Netflix in a release.
Earlier in the day, Warner Bros. Discovery acknowledged that Paramount’s updated $31 per share offer surpassed Netflix’s existing agreement. Previously, Netflix had granted Warner Bros. a seven-day window to solicit a “best and final offer” from Paramount.
Netflix had initially proposed a deal in December valued at $27.75 per share for Warner Bros.’ streaming and studio assets. The company had argued that its offer, combined with the planned divestiture of Warner Bros.’ cable assets, would provide superior value to shareholders.
In response to Paramount’s revised bid, the termination fee in case of regulatory approval failure was increased to $7 billion US from $5.8 billion US. Paramount expressed satisfaction with Warner Bros.’ board unanimously affirming the strength of its bid.
The Ellison Trust has upped its equity commitment to $45.7 billion US, supported by Larry Ellison and potential additional funds to meet Paramount’s bank solvency requirements. Meanwhile, Bank of America Merrill Lynch, Citi, and Apollo have raised their debt financing commitment to $57.5 billion US from an initial $54 billion US.
Activist investor Ancora Holdings, a minor Warner Bros. shareholder, intensified pressure on the company by criticizing its lack of engagement with Paramount during the bidding process.