Unexpected Twist in the Media Acquisition Battle
Warner Bros. Discovery CEO David Zaslav anticipated a final bidding round between Netflix and Paramount Skydance for the media company's assets, but Netflix opted out entirely.
Following Thursday's after-market close announcement, Warner Bros. Discovery declared Paramount Skydance's $31 per share offer superior to Netflix's previously accepted $27.75 bid for the studio and streaming assets.
This triggered a four-business-day match period for Netflix, which ended abruptly an hour and ten minutes later as the streamer exited the competition.
The transaction we negotiated would have created shareholder value with a clear path to regulatory approval. However, we’ve always been disciplined, and at the price required to match Paramount Skydance’s latest offer, the deal is no longer financially attractive, so we are declining to match the Paramount Skydance bid.
Discipline Modeled on Warren Buffett
Ted Sarandos' recent comments foreshadowed this move, drawing from former Berkshire Hathaway CEO Warren Buffett's playbook of never overpaying for an asset.
In a February 20 interview on FOX Business’ Claman Countdown, Sarandos stressed the importance of remaining a disciplined buyer.
We’ve been very disciplined buyers in our careers. Our shareholders know us and they expect us to continue to do what we do, which is remain a disciplined buyer.
Shareholder Concerns and Market Reaction
Netflix shareholders showed reluctance toward the merger since the November 20 bidding process started, with shares declining more than 19% amid worries over the $82.7 billion cost's impact on the balance sheet and regulatory approval.
The co-CEOs' statement aligned with investor sentiment, describing the transaction as a 'nice to have' at the right price, not a 'must have' at any cost.
Thursday evening's confirmation of Paramount's superior bid sparked a relief rally in Netflix shares, up nearly 10% in after-hours trading.
