Netflix Drops Bid for Warner Bros.

Netflix declined to raise its bid for Warner Bros. today, allowing Paramount Skydance to proceed with the acquisition.

“The transaction we negotiated would have created shareholder value with a clear path to regulatory approval,” the Netflix announcement explains. “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.”

As you may recall, Netflix announced that it would acquire Warner Bros., which includes HBO, for $82.7 billion last December. But Paramount unexpectedly offered $108.4 billion for the company just days later in a hostile takeover bid. So Netflix changed its bid to an all-cash offer.

That was going to be the end of it, we thought. But the Warner Bros. board of directors determined Thursday that a new Paramount bid for the company was the “superior proposal,” since Paramount would agree to pay a $7 billion breakup fee if the transaction wasn’t approved by regulators. It gave Netflix a chance to raise its bid. But Netflix declined.

“This transaction was always a ‘nice to have’ at the right price, not a ‘must have’ at any price,” Netflix noted. “We will continue to do what we’ve done for more than 20 years as a public company: delight our members, profitably grow our business, and drive long-term shareholder value.”