Netflix preparing all-cash offer for Warner Bros to fend off Paramount

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Netflix is preparing to amend the terms of its nearly $83bn deal to buy Warner Bros Discovery to make it an all-cash offer, in order to fend off Paramount’s hostile bid and speed up the acquisition’s closure.

Revising the terms of the deal is aimed at offering WBD shareholders a quicker and simpler transaction, people familiar with the matter said. The refreshed deal is still under discussion and plans could change, the people warned.

Shares in WBD rose 1.6 per cent on Tuesday after Bloomberg News reported that Netflix could revise the deal terms, suggesting the move was favoured by WBD’s investors. Representatives for Netflix and Warner did not respond to requests for comment. Paramount declined to comment.

Netflix’s original deal, which was agreed in early December, valued WBD’s studio and streaming assets at $27.75 a share, or an enterprise value of $82.7bn, of which $4.50 would be paid in Netflix’s stock.

Almost immediately after Netflix struck its deal, Paramount took its $108bn bid for the entirety of WBD, including its cable television division behind CNN, directly to shareholders and has managed to win some support on the merits of WBD returning to the negotiating table.

Pentwater Capital Management, WBD’s seventh-largest shareholder, threatened to vote down the Netflix deal last week if WBD failed to re-engage with Paramount if it sweetens its bid.

Paramount offered to buy the whole of WBD for $30 a share in cash. The media group, run by David Ellison, on Monday threatened to launch a proxy fight to overhaul WBD’s board and sued the company to force it to disclose financial information behind its decision to opt for Netflix’s deal.

As part of its lawsuit, Paramount said it wanted greater transparency about WBD’s valuation of its cable TV division, known as Global Networks, which will be spun off as part of the Netflix deal, and how the deal shifted debt between the divisions.

Since Netflix’s pursuit of WBD was made public in October, the streaming giant has lost more than a quarter of its value. Netflix’s shares jumped slightly on the news on Tuesday, closing up 1 per cent.