Netflix stock rises after abandoning planned Warner Bros acquisition

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Netflix has declined to raise its proposal to match a higher bid from Paramount for Warner Bros Discovery, citing that the deal was no longer financially attractive. The decision comes after Netflix’s stock surged over 10% on Friday following the announcement.

On Thursday evening, Netflix stated that it would not match Paramount’s latest $31 per share bid or raise its offer of $27.75 a share for Warner Bros’s studio and streaming assets. The company gave Warner Bros four business days to come up with a counteroffer, but instead responded less than two hours later, declining to raise its proposal.

In a joint statement, Netflix’s co-CEOs Ted Sarandos and Greg Peters expressed their intention to be strong stewards of Warner Bros’ iconic brands. However, they also emphasized that the transaction was not a “must have” at any price.

The decision has been welcomed by investors, who had questioned whether Netflix’s bid was a defensive attempt or an offensive shift away from its disciplined build-versus-buy approach. Analysts and investors believe that Netflix’s withdrawal from the race will allow it to refocus on its business while its closest competitors grapple with regulatory approval and merger integration processes.

Paramount’s deal, valued at $110 billion, including debt, represents nearly 13 times Warner Bros’ EBITDA this year. The company’s stock has risen 17% following the announcement.

Other analysts have expressed concerns about Paramount’s ability to make the deal work, citing that it needs more than just Harry Potter content to compete with Netflix and other streaming giants.

Source: Al Jazeera