In a high-stakes defense against a hostile takeover, Netflix is flashing the cash. The streaming giant is restructuring its acquisition of Warner Bros Discovery into an all-cash deal worth $83 billion. This move is specifically designed to protect the agreement from being dismantled by a rival bid from Paramount Skydance.
Paramount, backed by the Ellison family, has launched a $108.4 billion hostile bid. WBD’s board has rejected it due to high debt levels, but Paramount is attempting a boardroom coup to force the deal through. Netflix’s all-cash offer provides a secure alternative that neutralizes the threat of the hostile bidder.
The deal targets WBD’s premium assets: the Warner Bros film studio and HBO. WBD’s linear networks, such as CNN and the Cartoon Network, are excluded and will be spun off. This structure offers shareholders a safe harbor in the form of cash, contrasting with the risky leverage of the Paramount proposal.
The merger is facing significant political headwinds. US politicians have expressed concern that a Netflix-WBD giant would control nearly half of the streaming market. This potential for a monopoly is a major challenge for the deal’s completion.
Investors, however, are rallying behind the defense. WBD shares rose 1.6% on the news, suggesting that the market prefers the safety of Netflix’s cash. The strategy demonstrates how liquidity can be the ultimate defense in corporate warfare.