Netflix prepares improved offer for Warner Bros.
In the bidding war for Warner Bros., Netflix now apparently wants to up the ante: according to reports, the company is preparing a stronger cash offer.
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The bidding war for the entertainment company Warner Bros. continues: after potential buyer Paramount intensified its efforts and is now even resorting to legal action, the board's favorite Netflix might revise its offer. Several US media outlets report that Netflix is considering a new deal structure that, unlike the initial offer, consists purely of cash.
The deal that Netflix originally negotiated with Warner envisages a mix of cash and Netflix shares for shareholders: for each Warner share, shareholders are to receive 23.25 US dollars in cash and 4.50 US dollars in Netflix shares. However, Netflix shares have lost about 25 percent of their value since the deal was negotiated.
This plays into Paramount's hands: the US company has made a hostile takeover bid consisting purely of cash and has emphasized the volatility of Netflix's offer. A revised offer without stock components could counter this argument. According to Bloomberg, Netflix primarily aims to accelerate the acquisition process with the revised offer, which is not yet official.
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Paramount Sues
The board of Warner Bros. Discovery prefers the Netflix offer and has recommended shareholders accept it. The board does not think much of Paramount's offer: “The third-party financing for Paramount Skydance's (PSKY) offer relies on an unsecured, revocable trust commitment as well as the creditworthiness of a company with a market capitalization of 15 billion US dollars, whose credit rating is rated 'junk' status or only one notch above by the two leading rating agencies,” it states in an open letter from the board members from December.
Paramount CEO David Ellison, son of Oracle co-founder Larry Ellison, does not want to let this stand: The company is suing Warner Bros. Discovery in a court in the US state of Delaware. In the lawsuit, Paramount accuses Warner, among other things, of not adequately informing its shareholders about the Paramount offer.
Netflix wants to buy the entertainment division of Warner Bros. Discovery, while Paramount wants to take over the entire company. Unlike Netflix, Paramount is therefore also interested in the news business of Warner Bros. Discovery, which includes CNN and TNT. Larry Ellison, the father of Paramount CEO David Ellison, is considered a supporter of US President Trump.
(dahe)
