Netflix wins Warner Bros board backing for revised $27.75-per-share deal: Report

Netflix has secured the support of Warner Bros. Discovery’s board for its revised takeover proposal, edging ahead in the closely watched contest for the HBO owner, Reuters reported.

Under the revised merger agreement, Netflix has offered to pay $27.75 per share entirely in cash for Warner Bros’ film and television studios, content library and the HBO Max streaming service. This replaces its earlier proposal that included a mix of cash and Netflix stock.

In a regulatory filing on Tuesday, Warner Bros said the revised offer provides greater certainty to shareholders. “The merger consideration is a fixed cash amount to be paid by an investment-grade company, providing Warner Bros stakeholders with certainty of value and immediate liquidity upon closing of the merger,” the company said.

Earlier, Netflix had proposed a deal comprising $23.25 per share in cash and $4.50 per share in Netflix stock.

The Warner Bros board also disclosed its valuation assessment for Discovery Global, the entity that would house television assets including CNN, TNT Sports and the Discovery+ streaming service following the transaction.

According to the Reuters report, Warner Bros advisers used three valuation methodologies for Discovery Global, arriving at a low-end valuation of $1.33 per share and a high-end estimate of $6.86 per share.

The board said Netflix’s offer was superior to Paramount–Skydance’s competing all-cash bid of $30 per share, as the Netflix deal would allow Warner Bros shareholders to retain a stake in the separately listed Discovery Global.

Warner Bros reiterated its reasons for rejecting Paramount’s proposal, stating that the bid was insufficient after accounting for “price and risks, costs and uncertainties”.

The merger with Netflix would leave the combined company with approximately $85 billion in debt, compared with around $87 billion under a potential Paramount transaction.

Netflix’s financial strength also weighed in its favour. The streaming giant has a market capitalisation of about $402 billion, far exceeding Paramount’s roughly $12.6 billion valuation. Netflix also carries an investment-grade credit rating, while Paramount’s bonds are rated below investment grade by S&P and could face further pressure.