Warner Bros. Discovery Acquisition – Netflix Deal Seems Done
Paramount's offer was described as a true "leveraged buyout"
The board of directors of Warner Bros. Discovery unanimously rejected the new offer of $108.4 billion presented by Paramount Skydance, deeming it excessively risky due to the high debt required to finance it.
In a letter to shareholders, WBD described the proposal as a true leveraged buyout (due to limited equity), which would involve approximately $87 billion in debt, thus urging its rejection. Conversely, the company reiterated its support for the already announced agreement with Netflix, valued at $82.7 billion, for the sale of film and television assets.
Paramount's Indebtedness Deemed Excessive
Paramount, which had attempted a direct move on shareholders with a cash offer of $30 per share, returned with a stronger bid after Warner Bros.' initial refusal, bolstering the proposal with a $40 billion guarantee provided by Larry Ellison, founder of Oracle, and hypothesizing the use of $54 billion in new debt. However, according to WBD, the operation would remain disproportionate to Paramount's capitalization, which is approximately $14 billion, and would risk further aggravating its credit rating already classified as junk.
Warner Bros. instead highlighted Netflix's financial solidity, which boasts a capitalization of approximately $400 billion, A/A3 ratings, and an estimated free cash flow of over $12 billion in 2026. Netflix welcomed the decision, speaking of a future integration based on a “shared passion for storytelling.” If this is the case, bets are being taken on the fate of cinemas and Home Video physical productions.