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Netflix Drops Warner Bros. Deal, Shares Surge
27 Feb
Summary
- Netflix stock rose 10% after declining to increase its Warner Bros. offer.
- Paramount sweetened its offer to buy Warner Bros. Discovery for $31 per share.
- Netflix cited financial unattractiveness at the required matching price.
Netflix stock saw a significant boost, climbing nearly 10% in after-hours trading to over $92 per share, following its decision to walk away from the Warner Bros. Discovery acquisition. The company had initially agreed to a deal in December for $27.75 per share.
This week, Paramount sweetened its offer to acquire Warner Bros. Discovery, including its cable business, raising it from $30 to $31 per share. Warner Bros. possesses rights to valuable intellectual property, including the DC Comics library and 'Harry Potter' franchises.
Despite the valuable assets, investors had voiced concerns regarding the substantial cost and Netflix's expansion into areas outside its core business, like theatrical distribution. Netflix co-CEOs Ted Sarandos and Greg Peters issued a joint statement, explaining their disciplined approach and stating the deal was no longer financially attractive at the revised price.
They emphasized that the transaction was a 'nice to have' rather than a 'must have,' allowing them to maintain financial discipline and avoid overpaying. The company's stock had previously fallen sharply after the initial deal announcement.
