Paramount goes to WBD shareholders with a higher offer than Netflix.
In a saga that is playing out like a TV drama, Paramount Skydance (NASDAQ:PSKY) is attempting a hostile takeover to snatch Warner Bros (NASDAQ:WBD) from Netflix (NASDAQ:NFLX).
On Monday, December 8, Paramount initiated an all-cash tender offer to acquire Warner Bros Discovery for $30.00 per share in cash, or $108.4 billion.
This comes just days after it was announced last Friday that Netflix had acquired Warner Bros for $27.75 per share, or $82.7 billion.
The Paramount offer would be considered a hostile takeover, as the board of Warner Bros Discovery agreed to the Netflix deal. However, shareholders have not yet approved the deal, so Paramount is looking to swoop in with a bigger offer.
The Paramount offer is different from the Netflix deal as Netflix acquired just Warner Bros – meaning its film and TV studios, its movie library, as well as HBO and HBO Max. The Discovery side of the business — which includes CNN, TNT, Discovery Channel, and other TV assets – will spin off as its own separate publicly traded company.
However, the Paramount offer would be for the entire company – Warner Bros and Discovery.
Paramount, WBD stocks rise, Netflix stock falls
Paramount had made a similar offer to the Warner Bros Discovery board last Thursday, but it was rejected in favor of the Netflix offer.
“WBD shareholders deserve an opportunity to consider our superior all-cash offer for their shares in the entire company. Our public offer, which is on the same terms we provided to the Warner Bros Discovery Board of Directors in private, provides superior value, and a more certain and quicker path to completion,” David Ellison, chairman and CEO of Paramount, said. “We believe the WBD Board of Directors is pursuing an inferior proposal which exposes shareholders to a mix of cash and stock, an uncertain future trading value of the Global Networks linear cable business and a challenging regulatory approval process. We are taking our offer directly to shareholders to give them the opportunity to act in their own best interests and maximize the value of their shares.”
Shareholders have until January 8, 2026, to decide whether or not to accept the tender offer. If a majority of shareholders accept the offer, the WBD board would most likely be forced to accept the deal. If the shareholders reject it, then the transaction continues with Netflix.
Paramount stock was rising on the news, up about 10% on Monday to around $14.70 per share. Warner Bros Discovery stock was also rising, up around 4% to roughly $27 per share.
However, investors were selling on Netflix stock, as it dropped some 4% on Monday to approximately $96 per share. But Netflix remains a consensus buy among most analysts, with a median price target of $139.50 per share, which would suggest 45% upside.
Some analysts took a negative view of Netflix buying Warner Bros, calling it risky for the successful streaming leader, so the selloff could be a buying opportunity. But, investors are advised to stay tuned for more clarity as this drama unfolds.
