Netflix formally issues all-cash offer to Warner Bros. Discovery

Netflix has officially sweetened its deal to acquire Warner Bros. Discovery.

With Paramount going to great lengths to succeed in its takeover bid for Warner Bros. Discovery, issuing multiple all-cash offers, filing a lawsuit to compel WBD to disclose more information to its shareholders, and even arranging a proxy fight to install new board members, Netflix is making its first move since announcing its original deal.

According to multiple reports, Netflix has amended its offer for WBD’s streaming and studios businesses, changing its bid from a mix of cash and stock to cold, hard cash. Netflix’s original deal, which the WBD board accepted late last year, provided shareholders with $23.25 per share in cash, along with $4.50 of Netflix stock, bringing the total value of its offer to $27.75 per share. Now, Netflix is simplifying its bid, offering $27.75 in cash for each share a WBD investor holds.

The move “simplifies the transaction structure, provides greater certainty of value for WBD stockholders, and accelerates the path to a WBD stockholder vote,” the companies said in a press release.

Paramount, of course, argues that its $30 per share all-cash bid for the entirety of WBD is still superior to the Netflix offer on account of the value given to Discovery Global, the spinoff entity that will hold WBD’s current cable assets should the Netflix deal proceed. Paramount claims the spinoff will have an equity value between $0 and $1 per share, while WBD and Netflix believe the company would be worth between $3 and $4 per share. How Discovery Global is valued will ultimately go a long way towards determining which offer is truly superior.

Of course, there are other factors for the WBD board to weigh when considering which offer is, in fact, superior. For one, the financing for each bid is much different, with Paramount relying on significant backing from Middle Eastern sovereign wealth funds. There’s also the regulatory forecast to consider, as both companies have legitimate claims that their bid will be more likely to gain the approval of the Trump administration.

Whichever company comes out on top will have a major impact on the future of TNT Sports. Should the Netflix deal go through as planned, TNT Sports will operate under the Discovery Global umbrella, a company that will likely seek another acquisition shortly after it is spun out. If Paramount is able to convince WBD shareholders (or its board) that it is providing a better offer, TNT Sports could end up combined with CBS Sports, creating a sizable sports division to rival ESPN’s live sports portfolio.