WBD shares have gained 8% in the last eight sessions as a bidding war plays out.
- WBD on Tuesday said it is reopening talks with Paramount to hear the latter’s best offer.
- Netflix and WBD agreed to a deal in December, wherein the streaming giant would buy the company’s streaming and studio assets; Paramount has relentlessly pursued the deal, with competing offers.
- Netflix and Paramount stocks are under pressure as the deal drags on.
A sharp rally in Warner Bros. Discovery, Inc. shares in recent days signals that investors are increasingly betting on a sweeter bid emerging, as Paramount Skydance steps up efforts to challenge the December agreement with Netflix.
Warner Bros. shares have bounced 8% from this recent low on Feb. 5. On Stocktwits, retail sentiment for WBD remained ‘extremely bullish,’ unchanged since last Friday.
Renewed Talks With Paramount
A major twist came on Tuesday, when Warner Bros. announced it would engage with Paramount over the coming days to hear its final offer, with Netflix's permission.
Paramount has until Feb. 23 to present its best offer and convince the Warner Bros. board, which will then meet on Mar. 20 for a shareholder vote on the deal.
At the heart is the deal price. Warner Bros. has rejected Paramount’s $30 per share offer, even with the additional cash benefits added last Tuesday. Industry watchers are speculating that Paramount would soon bump it up to $31 per share; however, retail investors expect that a $33 or $34 per share would be required to tip the scales in Paramount’s favour.
“WBD already rejected the $31 rumoured bid..they expect a bid over $31 within the next 7 days… A win for para is more and more looking like a joke,” a user speculated.
Netflix Stock Overhang
Netflix retains the right to raise its bid. As per the deal agreed upon in December, Netflix has offered to buy Warner Bros.’s studio and streaming assets for $27.75 per share. Paramount’s offer is for the entire Warner Bros.
As the deal drags on – observers expect a long road to regulatory clearance – it has become an overhang for Netflix and Paramount stocks.
Although Netflix shares gained in the last three sessions, they are still down about 42% from their Jun. 30 peak. Stocktwits sentiment for Netflix has shifted between ‘bearish’ and ‘extremely bearish’ zones most of this month, with users questioning whether it's time to drop the WBD pursuit.
A user posted: “$NFLX either way the deal goes, it really doesn’t matter. What matters is that we get certainty on the outcome.”
Paramount shares are down about 44% from their peak on Sept. 23.
Deal Saga Recap
- Rumours that Paramount and Netflix were circling Warner Bros. for a potential acquisition began emerging in September.
- In November and December, Warner Bros. received and reviewed several bids and, on Dec. 5, announced a deal with Netflix.
- On Dec. 8, Paramount announced a hostile bid for Warner Bros., proposing an all-cash offer of $30 per share. Paramount has revised its bid more than once since then, but none have been accepted.
- On Jan. 12, Paramount filed a lawsuit to compel Warner Bros. to disclose details of its deal with Netflix and to nominate directors to Warner Bros. Discovery's board.
- On January 20, Netflix amended its bid to an all‑cash offer.
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