Netflix, new all-cash offer for Warner Bros Discovery

An overhaul to unlock a dossier worth nearly $83 billion. Netflix is overhauling the terms of its deal with Warner Bros Discovery, turning it into an all-cash offer, with the aim of simplifying the structure of the deal, reducing its execution risks and strengthening its appeal to Wbd shareholders.

Over the past few days, the rumour had come to the fore just as the other contender, Paramount Skydance, decided to take the fight to the next level, with a lawsuit and the announcement of a proxy fight. Now comes the official confirmation.

The original agreement, signed in early December between Netflix and Warner Bros Discovery, valued Wbd's film and streaming assets (Hbo Max) at $27.75 per share, for an enterprise value of $82.7 billion, including a Netflix equity component of $4.50. The move to 'all-cash' aims to reduce the complexity and uncertainties typical of mixed transactions and shorten the time to close.

On the table, however, remains the competing proposal from Paramount, which has launched a hostile $30 per share, all-cash offer for the entire Wbd - approximately $108.4 billion - including the cable TV division (Global Networks, with CNN). Paramount accused Warner of not having interacted in a meaningful way and upped the pressure by announcing a lawsuit to get more information about the deal with Netflix - which failed - and the possibility of a proxy battle over the board of directors.

Warner's board, for its part, unanimously reiterated that Paramount's offer was "not superior" to the one with Netflix, referring to the issue of financing risk: according to the company, the rival proposal would depend heavily on debt, increasing uncertainty over the ability to close. Paramount responded by pointing to a capital strengthening - including through capital backing attributable to Larry Ellison - but the judgement remains open.