In an attempt to appease the shareholders of Warner Bros. Discovery ( WBD ), Netflix is now offering cash for stock in the company, revising the cash and stock deal it struck with WBD’s board earlier.
However, the streaming giant is still offering the same $27.75 the companies had agreed to for WBD’s movie studio and streaming assets, and the deal still values the company at $82.7 billion.
The new offer serves to simplify the structure of transactions, companies he said in a statement on Tuesday, it “provides greater certainty of value” and speeds up the timetable for a shareholder vote. Netflix said it would finance the deal with cash, debt and “committed financing.”
The change comes as rival suitor Paramount Skydance has stepped up efforts to win over WBD shareholders with its $30-a-share cash offer for the entire company, including securing a $40 billion guarantee from CEO David Ellison’s billionaire father, Oracle co-founder Larry Elli.
Paramount, which was trying to buy Warner Bros. Discovery for months, last week sued the company for more information about the Netflix bid and said it would appoint new members to Warner Bros. board, after WBD rejected its offer. The company also tried to expedite the lawsuit, but the court rejected that effort.
Netflix, for its part, has so far stuck to its original cash-and-cash offer, enjoying the full support of WBD’s board, which has resolutely rejected Paramount’s bids. WBD argued that a sale to Netflix would result in a better deal because the streaming giant has the funds to pay, and said the Paramount deal carries “substantially more risk” as it would saddle the combined company with $87 billion in debt.
Warner Bros. has also questioned Paramount’s ability to operate after the deal is completed, arguing that raising such amounts of debt would further deteriorate Paramount’s current creditworthiness, and has raised concerns about Paramount’s negative free cash flow, which would be exacerbated by the acquisition.
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WBD said in October it was exploring a sale after receiving unsolicited interest from several parties. The company, valued at more than $45 billion at the time but saddled with billions in debt, has struggled amid declining ratings and intensifying competition from streaming rivals like Netflix. The streaming giant soon came out on top after winning a bidding war against Paramount and Comcast.
