Warner Bros. Exec Reveals $110 Billion Merger with Paramount in Town Hall Meeting

Warner Bros. Discovery to be Acquired by Paramount Skydance in $110 Billion Deal

Paramount Skydance (PSKY.O) has reached an agreement to acquire Warner Bros. Discovery (WBD.O) in a $110 billion deal, signed on Friday morning, according to an audio clip of a global townhall by Warner Bros..

The agreement caps a bidding war after Netflix declined to match Paramount's latest $31-per-share offer, deemed superior by Warner Bros. to the streaming pioneer's $27.75-per-share agreement for its studio and streaming assets. Paramount shares jumped 24%, while Netflix rose 13% as investors welcomed its decision to back out of the Warner Bros. race.

The merger is expected to create one of the largest film studios in the world, allowing Paramount to tap Warner Bros.' trove of intellectual property, including franchises such as "Fantastic Beasts" and "The Matrix". The deal also enables Paramount to bolster its streaming efforts, with a potential combination of HBO Max and Paramount+, enabling it to gain market share and tussle with market leader Netflix.

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Paramount was in pursuit of Warner Bros. since late last year, launching a hostile campaign to wrestle the company from the streaming giant by consistently raising its offer. The company, led by billionaire David Ellison, enticed Warner Bros.' board back to the bargaining table by raising the possibility of an improved cash offer.

The deal includes $29 billion in debt and a revised termination fee of $7 billion, up from $5.8 billion, should the deal fail to gain regulatory approval. Paramount also agreed to pay the $2.8 billion termination fee that Warner Bros. owes Netflix.

The acquisition has drawn scrutiny from California State Attorney General Rob Bonta, who said that the state is investigating the Paramount deal and will be "vigorous" in its review. Lawmakers on both sides of the political aisle have raised concerns that any deal to acquire Warner Bros. could result in fewer choices and higher prices for consumers. Cinema operators are also concerned that combining large Hollywood studios could cost jobs and reduce the number of movies released in theaters.