Netflix has amended its $72 billion acquisition of Warner Bros. Discovery to an all-cash offer, aiming to secure shareholder approval amid a rival hostile takeover attempt by Paramount. The change simplifies the deal and eliminates stock-related uncertainties, with a shareholder vote targeted for April 2026. Warner Bros plans to spin off its cable TV assets beforehand.
Netflix and Warner Bros. Discovery announced on January 20, 2026, a revision to their merger agreement, converting the original mix of cash and stock into a full cash payment of $27.75 per share. This adjustment maintains the deal's $72 billion equity value and $82.7 billion enterprise value, covering assets like HBO Max and WB Studios. The move responds to pressure from Paramount's aggressive bid, which seeks to acquire the entire company for $108.4 billion at $30 per share.
The original terms offered Warner shareholders $23.25 in cash plus $4.50 in Netflix stock per share, but included a collar mechanism to adjust for Netflix's share price fluctuations. With Netflix's stock dropping from $100.24 in early December to around $88, the all-cash structure removes such variability. Netflix will fund the purchase using existing cash reserves, credit facilities, and new financing, leveraging its strong position: a $400 billion market cap, A/A3 credit rating, and projected $12 billion in free cash flow for 2026.
Warner Bros. board Chairman Samuel Di Piazza Jr. stated, “By transitioning to all-cash consideration, we can now deliver the incredible value of our combination with Netflix at even greater levels of certainty, while providing our stockholders the opportunity to participate in management’s strategic plans to realize the value of Discovery Global’s iconic brands and global reach.” The board intends to complete a spinoff of its cable TV division into Discovery Global before the Netflix deal closes, a step incompatible with Paramount's full-company takeover.
Paramount, a smaller entity with a $14 billion market cap, junk credit rating, and negative free cash flow, has pursued a hostile approach, including a lawsuit filed last week in Delaware Chancery Court. The suit claims Warner Bros. withheld key disclosures, such as spinoff valuations—estimated by Paramount at $0 per share—to aid shareholder decisions. Paramount CEO David Ellison argued, “WBD shareholders need this information to make an informed investment decision on our offer—and importantly, Delaware law has consistently required that such information be provided to shareholders.” Warner Bros dismissed the bid as “illusory” due to its heavy debt reliance and rejected the lawsuit as meritless. A judge last week denied Paramount's request to expedite the case, citing no irreparable harm.
This escalation highlights tensions in media consolidation, with Netflix positioning itself as the more reliable partner to preserve Warner's strategic options.
