Netflix and Warner Bros. Discovery Modify Merger Agreement for All-Cash Payment
Netflix and Warner Bros. Discovery announced on Monday that they have amended their merger agreement, transitioning from a mixed transaction to an all-cash payment. The amount remains set at $27.75 per Warner Bros. Discovery share, according to the joint statement from both companies.
Amended Terms for Shareholders
The two companies have modified the terms of their initial agreement to offer Warner Bros. Discovery shareholders an exclusively cash payment, the statement indicates. The valuation remains unchanged at $27.75 per WBD share. WBD shareholders will also receive the value of shares from Discovery Global following the planned separation of this entity. According to Netflix, the transaction will be financed through a combination of available cash, credit lines, and committed financing. The California-based company stated that this revised structure aligns with its capital allocation framework while maintaining a strong balance sheet and investment-grade rating.
Accelerating Shareholder Approval Process
The new structure aims to accelerate the shareholder approval process for Warner Bros. Discovery, which could occur as early as April 2026, according to both companies. WBD filed a preliminary proxy statement with the SEC on Monday, January 20. The boards of directors of Netflix and WBD have unanimously approved this amendment. The completion of the transaction remains contingent upon the separation of Discovery Global, obtaining regulatory approvals, and the approval of WBD shareholders. Both groups have filed their Hart-Scott-Rodino filings and are in discussions with competition authorities, including the U.S. Department of Justice and the European Commission.
Separation of Warner Bros. and Discovery Global
As previously announced, Warner Bros. Discovery will separate its Warner Bros. and Discovery Global operations into two distinct publicly traded entities, the statement indicates. This operation is expected to be finalized within six to nine months, before the conclusion of the acquisition by Netflix. The overall transaction is expected to be completed 12 to 18 months after the signing of the initial merger agreement between Netflix and WBD, according to both companies. Moelis & Company and Skadden, Arps, Slate, Meagher & Flom are advising Netflix, while Wells Fargo, BNP, and HSBC are acting as arrangers for the debt financing. Allen & Company, J.P. Morgan, and Evercore are advising Warner Bros. Discovery, assisted by Wachtell, Lipton, Rosen & Katz and Debevoise & Plimpton.
