Warner Bros reopens takeover talks with Paramount after receiving a waiver from Netflix

NEW YORK (AP) — Warner Bros. Discovery is briefly reopening takeover talks with Skydance-owned Paramount to hear the company’s “best and final” offer, while the Hollywood giant continues to back the studio and streaming deal it struck with Netflix.

In a Tuesday regulatory filing, Warner said it had received a waiver from Netflix to reopen talks with Paramount for the next seven days, or until Monday. Warner said this will allow the companies to discuss unresolved “deficiencies” and “clarify certain terms” of Paramount’s latest bid.

But in the meantime, Warner’s board is still recommending shareholders support of its proposed merger with Netflix. A special meeting is now scheduled for Friday, March 20 to hold a vote on that deal.

In a statement, Netflix said it was confident that its proposed transaction “provides superior value and certainty” — but recognized “the ongoing distraction for WBD stockholders and the broader entertainment industry caused by PSKY’s antics.” The streaming giant noted it had granted Warner a seven-day waiver to “finally resolve this matter.”

Warner’s leadership similarly reiterated its support for the Netflix deal.

Meanwhile, Paramount called Tuesday’s actions from Warner’s board “unusual” and said the company could have determined whether Paramount’s offer was superior without a timed deadline. Still, Paramount said it was “nonetheless prepared to engage in good faith and constructive discussions.”

Paramount added that it will continue to advance its tender offer priced at $30 per share, which it maintained was better than Netflix’s proposal, while also pursuing a proxy fight.

The battle for Warner Bros. Discovery is complicated because Netflix and Paramount want different things. In December, Netflix agreed to buy Warner’s studio and streaming business for $72 billion, now in an all-cash transaction that would cover its legacy TV and movie production arms, as well as HBO Max. Including debt, the enterprise value of the deal is about $83 billion, or $27.75 per share, and would be finalized after Warner completes a previously-announced separation of its cable operations.

Meanwhile, unlike Netflix, Paramount wants to acquire Warner’s entire company — including networks like CNN and Discovery — and went straight to shareholders with an all-cash, $77.9 billion hostile offer just days after the Netflix deal was announced.

The enterprise value of Paramount’s bid currently stands around $108 billion including debt, or $30 per share. But Warner disclosed Tuesday that a Paramount representative separately informed the company it would up its offer to $31 per share “pending engagement.”