Shares of Warner Bros. Discovery climbed 3% during Friday’s trading session after reaching an $82.7 billion deal that will see Netflix acquire its streaming and studio assets.
WBD stock, which is trading at $25.30 apiece, is up 6.6% in the past five days, 11.2% in the past month, 162% in the past six months and 137% year to date and in the past year. It briefly touched a new 52-week high of 25.46.
Meanwhile, Netflix, which is trading around $102 apiece, were trading flat on Friday morning.
The cash and stock deal, which is expected to close in the next 12 to 18 months, values Warner Bros. Discovery at $27.75 per share, implying a total equity value of approximately $72 billion and an enterprise value of approximately $82.7 billion.
Under the terms of the deal, each WBD shareholder will receive $23.25 in cash and $4.50 in shares of Netflix common stock for each share of WBD common stock outstanding at the closing of the transaction.
The stock component is subject to a collar under which WBD shareholders will receive Netflix stock valued at $4.50 per share, provided the 15-day volume weighted average price (“VWAP”) of Netflix’s stock price falls between $97.91 and $119.67. If the VWAP is below $97.91, WBD shareholders will receive 0.0460 Netflix shares for each WBD share. If the VWAP is above $119.67, WBD shareholders will receive 0.0376 Netflix shares for each WBD share.
Netflix expects to realize at least $2 billion to $3 billion of cost savings per year by the third year of the deal and expects the transaction to be accretive to earnings per share by year two.
The deal comes after WBD launched a strategic review of alternatives in October, citing “unsolicited interest” from multiple parties for all or part of its business.
In addition to continuing on with its planned split into Warner Bros. and Discovery Global, the company’s board considered separate transactions for the two companies or a deal for the entire combined company. WBD also considered an alternative separation structure that would enable a merger of Warner Bros. and spinoff of Discovery Global to its shareholders.
Netflix, Paramount and Comcast would enter a contentious bidding war, with Paramount submitting multiple bids for the entire company, while Netflix and Comcast submitted bids for the studio & streaming business. The bidding went for three rounds before Netflix and WBD entered exclusive talks.
Warner Bros. Discovery’s split of its studios and streaming and global linear networks business will be completed in the third quarter of 2026, prior to the closing of the Netflix deal. Discovery Global will be a publicly-traded company that houses CNN, TNT Sports, in the U.S., and Discovery, free-to-air channels across Europe, and digital products such as Discovery+ and Bleacher Report.
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