Netflix has agreed to acquire Warner Bros. Discovery, but Paramount Skyview is trying to ruin the party with a hostile bid.
If it goes through, the deal would inject Netflix with highly valuable content, but it would also stretch the company’s balance sheet.
Netflix stock has dropped amid the drama, presenting a potential buying opportunity for the streaming leader.
10 stocks we like better than Netflix ›
Netflix (NASDAQ: NFLX) pioneered the media industry when it launched its streaming service in 2007. Suddenly, video and DVD rentals were a thing of the past.
Fast forward to today, and Netflix is a leading global streaming service, though there’s competition around seemingly every corner. Netflix has now begun to reinvent itself again. However, this time, the streaming giant wants to expand its content empire in a blockbuster acquisition of Warner Bros. Discovery.
But nothing is simple. One of Netflix’s archrivals is attempting to beat the streaming giant to the punch with a hostile takeover. Netflix stock has declined since the company initially announced the deal had been agreed to.
Is Netflix’s ambitious deal good for investors, and will the stock head higher? Here is what you need to know.
Image source: Netflix.
The company recently announced a deal to acquire strategic assets from Warner Bros. Discovery, including its film and television studios, as well as HBO and the HBO Max streaming service. It’s a substantial deal, with an enterprise value of approximately $82.7 billion.
Netflix had been in a bidding war with Paramount Skydance over Warner Bros. Discovery. Following Netflix’s announcement of its acquisition agreement, Paramount Skydance announced their plans to attempt a hostile takeover by presenting an all-cash offer directly to Warner Bros. Discovery’s shareholders worth $30 per share, valuing the proposal at an enterprise value of $108.4 billion.
There are numerous moving parts here.
First, Netflix and Warner Bros. Discovery have agreed to a deal. There are fees if the merger doesn’t go through. Additionally, the deal is highly public and has already sparked regulatory scrutiny among politicians, who have called it anticompetitive.
Only time will tell what ultimately happens here, but it’s helpful to evaluate the two most likely outcomes. Warner Bros. Discovery wants to sell, so it seems that a deal will eventually proceed with one suitor or another.
If Netflix does close the acquisition, it would gain a vast array of intellectual property, including Game of Thrones, the Harry Potter franchise, and numerous other movies and shows. Netflix announced its plans to keep HBO Max separate from Netflix’s core streaming services, but it could grow HBO Max by promoting it to its existing 300 million-plus subscribers.
Story Continues