Netflix and Paramount Shares Rise as Warner Bros Bidding War Concludes

Netflix Exits Warner Bros. Discovery Acquisition Race, Boosts Paramount's Shares

Netflix shares surged 9% in premarket trading on Friday, following the company's decision to drop out of the high-stakes race to acquire Warner Bros. Discovery (WBD). The move effectively clears the path for Paramount Skydance, led by David Ellison, to proceed with a takeover of WBD.

Paramount Skydance shares jumped 10% in premarket trading, solidifying the company's position as the frontrunner to acquire WBD and its prized TV and film assets. WBD's stock was marginally lower, slipping 1% in premarket trading on Friday.

The acquisition battle, which has been ongoing for months, involves a complex web of negotiations and bids. In December 2023, Netflix inked a deal worth $82.7 billion, including assumed debt, to acquire WBD. However, Paramount Skydance continued to offer repeated bids, ultimately submitting a superior offer worth $31 per share, valuing WBD at approximately $111 billion.

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Netflix announced its exit from the acquisition race on Thursday, citing that Paramount Skydance's revised bid was financially unattractive. The streaming giant had initially granted a seven-day window for WBD to engage in talks with Paramount Skydance, resulting in a higher revised bid.

The next step in the process is for Paramount to navigate regulatory hurdles, including antitrust scrutiny in Washington, foreign countries, and US states, including California. The company has raised the termination fee it would pay to WBD in the event of regulatory approval failure to $7 billion from $5.8 billion. Additionally, Paramount has promised to provide $2.8 billion to Warner Bros. to pay Netflix for terminating their agreement.