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The bid for Warner Bros Discovery has ended, with Paramount Skydance Corporation set to acquire the company after Netflix declined to increase its offer.
On Thursday, Warner Bros. Discovery said Paramount Skydance’s latest proposal of $31 per share qualifies as a “Company Superior Proposal” under its existing merger agreement with Netflix.
That decision gave Netflix four business days to respond with a better offer, but Netflix chose not to.
“The transaction we negotiated would have created shareholder value with a clear path to regulatory approval,” said Netflix co-CEOs Ted Sarandos and Greg Peters 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. Discovery must now pay Netflix a $2.8 billion termination fee to exit their agreement, however, Paramount Skydance has agreed to cover that cost as part of its revised bid.
The offer values Warner Bros. Discovery at about $111 billion. It includes the company’s film and television studios, HBO, its streaming platforms, gaming arm and cable networks such as CNN, TNT, TBS, Discovery and HGTV.
Paramount itself was acquired last year by Skydance Media, controlled by David Ellison. The deal was backed by his father, Larry Ellison, the executive chair of Oracle and one of the world’s richest men.
Larry Ellison has agreed to provide additional equity if required to support the financing.
Paramount will also take on roughly $33 billion of Warner Bros Discovery’s debt. The acquisition is backed by a $57.5 billion debt commitment from Bank of America Merrill Lynch, Citi and Apollo Global Management.
Netflix first moved on Warner Bros. Discovery in December with an offer worth nearly $83 billion for its studios and streaming business. Paramount countered several times.
At one point, it offered $108 billion for the full company, including its traditional television networks. Its latest $31-per-share bid ultimately prevailed.
Warner Bros. Discovery’s board said it reached its decision after consulting independent financial and legal advisers. While the Netflix agreement is technically still in place during the notice period, the board confirmed it has informed Netflix of its determination.
David Ellison has already warned that job cuts are likely once the transaction closes. His growing influence in news media has drawn attention, especially following changes at CBS, another asset under his control. Larry Ellison is a primary donor and supporter of President Donald Trump.
Shortly after, Netflix shares rose by as much as 10% in after-hours trading in New York while Paramount shares gained about 4.5%.
Warner Bros. Discovery has filed the required documents with the US Securities and Exchange Commission in relation to both the Paramount tender offer and its earlier agreement with Netflix.
Shareholders have been advised to review those filings in full before taking any action.
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