We are offering a limited cyber sale now that offers you savings of 75% at $1 a week. Don't miss out. Sign up now.

Greetings!

The Warner Bros. Discovery M&A saga has grown increasingly complicated, with Paramount and Netflix still in the mix and the seldom-used hostile bid tactic having folks Googling tender offer mechanics (OK, that was me). 

Yesterday, I ran down the myriad of developments on the breaking story. Today, I break down what this all means and the pros and cons from a shareholder perspective, and end with a tease of what's next. 

Netflix:

• Pros: You get a mix of $23.25 a share in cash and $4.50 in Netflix stock, which has proven to be a real winner over the last few years. You will also get shares in the spinoff of Discovery Global. Financially, it's in a strong position to close the deal. 
• Cons: There are two variables to consider. The first is the regulatory scrutiny over the idea of the top streamer buying the No. 3 player, a clear example of monopolistic behavior. Netflix will argue players like YouTube and TikTok are competitors too, but we'll see if antitrust officials buy it. The other is the value of Discovery Global, and whether it can be valued at the $3-to $4-a-share mark cited by WBD CEO David Zaslav.

Paramount:

• Pros: The company is offering $30 a share in cash for everything and a promise that it will have a faster regulatory review process. 
• Cons: The deal almost entirely discounts Discovery Global. Looking at Netflix's offer of $27.75, Discovery Global would just need to post a value of more than $2.25 a share for investors to see an upside if they went with the streaming giant. And while Paramount CEO David Ellison believes it will be smooth sailing through antitrust review, that may not be the case given he's buying another studio. 

For more of my analysis, where I also break down a few other X factors, click on to the story. 

Looking ahead, Paramount's tender offer lasts 20 days, and within 10 days, WBD will respond with more details justifying its agreement with Netflix. But, as our Lucas Manfredi notes, Ellison has said the $30 bid isn't his "best and final" offer, suggesting he could sweeten the deal even further. 

If I'm a shareholder, I'm looking at my investment and running the math on scenarios under Paramount vs. Netflix.

Roger Cheng
Managing Editor of Business and PRO
roger.cheng@thewrap.com

P.S. Lost in the shuffle of all the hostile bid coverage was TheWrap winning Best Website at the Los Angeles Press Club’s 18th annual National Arts & Entertainment Journalism Awards, in addition to seven individual awards. Here's a shoutout to our amazing team!

THE TRUMP FACTOR

Looming over the decision shareholders will have to make will be Donald Trump...

To continue reading, subscribe now with a 2-week free trial.

Want more? Explore WrapPRO now.