The Warner Bros. Discovery board of directors announced Tuesday that a revised bid from Paramount Skydance of $31 per share could “reasonably be expected” to lead to a “superior proposal” in its potential acquisition deal with Netflix.
Per a press release issued by the David Zaslav-led company, WBD’s board “has not made a determination” as to whether the revised proposal is “superior” to the merger agreement in place with Netflix, and WBD “will engage further” with Paramount to determine if a “company superior proposal” — a term defined within the language of its existing Netflix pact — can be reached. If the board finds such a deal has been received, Warner Bros. Discovery says Netflix will “have four business days after such determination to negotiate with WBD and to propose any revisions to the Netflix transaction.”
The Netflix deal, which includes buying Warner Bros. and HBO Max, is valued at nearly $83 billion. Paramount most recently fielded a $108 billion offer for the entirety of WBD, including its cable channels.
As it stands, Warner Bros. Discovery’s Netflix agreement remains in effect, and the WBD board says it is continuing to recommend in favor of that deal, which is up for a vote on March 20. Warner Bros. Discovery emphasized that there’s “no assurance” that the board will find the transaction superior to the Netflix merger, or “that any definitive agreement or transaction” will come from further discussions with Paramount.
The new Paramount bid will include an increased purchase price of $31 per WBD share, plus a daily ticking fee of 25 cents per quarter beginning after Sept. 30, as well as a $7 billion regulatory termination fee payable by Paramount Skydance if the deal does not close due to regulatory matters, and payment of the $2.8 billion termination fee that Warner Bros. Discovery would be required to pay to Netflix to terminate their existing merger agreement.
Additionally, Paramount’s new proposal would include contribution of additional funding to “the extent needed to support the solvency certificate” required by Paramount Skydance’s lending banks, and a “company material adverse effect” definition that excludes the performance of WBD’s linear networks business.
A representative for Netflix declined Variety‘s request for comment Tuesday.
Monday wrapped a busy seven-day period in which the WBD board sought Netflix’s blessing to engage in discussions with Paramount to “seek clarity” on its “best and final offer.” WBD asked Paramount Skydance “to clarify your proposal, which we understand will include a WBD per share price higher than $31” in a letter from Warner Bros. Discovery CEO Zaslav and board chairman Samuel Di Piazza Jr. to Paramount’s board.