Netflix soared more than 9% in premarket Friday as investors cheered Warner Bros. Discovery’s decision to exit the battle, while Paramount rose about 10% after winning the race for some of the world’s most valuable TV and film properties.
The end of a months-long bidding war has put a renewed focus on the significant antitrust scrutiny that the Paramount-Warner Bros. partnership will face in the United States and Europe, including an active investigation in California. Warner Bros. stock price fell slightly.
Paramount Skydance continued to doggedly pursue Warner Bros., launching a hostile campaign to wrest the award from Netflix. The company succeeded in bringing Warner Bros. back to the negotiating table last week with a revised bid of $31 a share, above Netflix’s offer of $27.75 for the studio and streaming assets.
Netflix confirmed to Reuters that it was withdrawing from the takeover battle, saying the price required to remain in the contest exceeded what it considered financially sound. “We have always remained disciplined…this transaction is no longer financially attractive,” the company said.
“The bid always looked like a combination of attack and defense, increasing substance and scale and preventing competition from gaining an advantage. But the price was very high,” said Matt Blitzman, senior equity analyst at Hargreaves Lansdown.
“At least for now, the market seems to be pricing this in as a win for everyone.”
In the battle for Warner Bros., the Paramount consortium, backed by billionaire Larry Ellison and led by his son, Paramount CEO David Ellison, also increased its termination fee to $7 billion and extended financing commitments to include $45.7 billion in stock.
“In the U.S., Paramount believes it has sufficient relationships with the presidential administration to allay concerns, and the Justice Department set a precedent for overlooking major studio mergers during Disney’s acquisition of Fox,” Morningstar analysts said.
(Reporting by Rasika Singh and Kanchana Chakravarti in Bengaluru; Editing by Arpan Varghese and Devika Shamnath)
