Warner Bros resumes acquisition discussions with Paramount following a waiver approval from Netflix.

Warner Bros. Discovery has initiated a temporary reopening of acquisition negotiations with Paramount Global, which is owned by Skydance. This engagement allows Warner Bros. to evaluate what it terms Paramount’s “best and final” offer while simultaneously affirming its commitment to a merger agreement with Netflix. According to a regulatory filing made on Tuesday, Warner Bros. has received a waiver from Netflix, granting the companies a seven-day window to clarify unresolved aspects of Paramount’s most recent bid.

Despite this renewed dialogue with Paramount, Warner Bros. Discovery’s board continues to advocate for shareholder approval of its billion merger with Netflix. A special meeting has been convened for March 20, during which shareholders will vote on the proposed deal, which encompasses not just the studio but also the subscription streaming service HBO Max. The deal’s total enterprise value, including debt, is projected to be approximately billion, or around .75 per share, pending Warner’s completion of a prior separation of its cable operations.

In contrast, Paramount has aimed to acquire Warner Bros. Discovery as a complete entity, which includes noteworthy assets like CNN and Discovery itself. The company has made a direct approach to shareholders, presenting a hostile all-cash offer valued at .9 billion, following the announcement of the Netflix deal. Paramount’s bid currently reflects an enterprise value of approximately 8 billion, amounting to per share. However, Warner has disclosed that Paramount representatives have suggested they may elevate their offer to per share, contingent on further negotiations.

Market analysts have expressed a belief that Paramount is prepared to enhance its bid further, potentially altering the competitive landscape of these negotiations. If Paramount’s offer reaches or per share, experts argue it may present a credible challenge to the Netflix proposal, prompting the streaming giant to reassess its strategy.

In recent developments, Paramount has sought to bolster its stance by proposing additional incentives such as a “ticking fee,” which would be payable to Warner shareholders if the deal is not finalized by the end of 2023. This fee amounts to 25 cents per share, totaling 0 million for each quarter following December 31. Furthermore, Paramount has committed to funding Warner’s anticipated .8 billion breakup fee with Netflix, should their merger not materialize.

As Paramount attempts to gain more shareholder backing, it has publicly opposed Warner’s merger with Netflix, with at least one activist investor, Ancora Holdings, voicing dissent. The situation remains dynamic, as all parties navigate the complexities of shareholder interests and regulatory scrutiny over potential antitrust implications. Following the resumption of negotiations, it remains to be seen what strategies Paramount, Warner Bros., and Netflix will pursue over the coming days.

Concerns regarding potential antitrust violations have been raised, and both the U.S. Department of Justice and international regulators are closely monitoring these developments. Additionally, shares for Warner Bros. Discovery have shown modest gains, while Paramount and Netflix have experienced varied market responses.