It is one of the largest-ever media transactions to be seen in modern times, and it will bring HBO, HBO Max and the Warner Bros. studio to Netflix.
Financial terms of the agreement and how WBD shareholders will be impacted were shared along with the acquisition announcement early Friday.
Under the terms of the agreement, each WBD shareholder will receive $23.25 in cash and $4.50 in shares of Netflix common stock — reflecting a 10% symmetrical collar — for each share of WBD common stock outstanding at the closing of the transaction.
As further explained, the stock component is subject to an agreement under which WBD shareholders will receive Netflix stock valued at $4.50, provided the 15-day volume weighted average price of Netflix stock price (measured three trading days prior to closing) 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.
The transaction 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.
To make the deal happen, as revealed in June, WBD plans to separate its Streaming & Studios and Global Networks divisions into two separate publicly traded companies. This split is now expected to be completed in Q3 2026, prior to the closing of this transaction.
The newly separated publicly traded company holding the Global Networks division, Discovery Global, will include entertainment, sports and news television brands such as CNN, TNT Sports in the U.S., and Discovery, free-to-air channels across Europe, and digital products such as Discovery+ and Bleacher Report.
The transaction was unanimously approved by the Boards of Directors of both Netflix and WBD. In addition to the completion of the separation of Discovery Global (WBD’s Global Networks business), completion of the transaction is subject to required regulatory approvals, approval of WBD shareholders and other customary closing conditions. The transaction is expected to close in 12-18 months.
Moelis & Company LLC is acting as Netflix’s financial advisor and Skadden, Arps, Slate, Meagher & Flom LLP is serving as legal counsel. Wells Fargo is acting as an additional financial advisor and, along with BNP and HSBC, is providing committed debt financing related to the transaction.
Allen & Company, J.P. Morgan and Evercore are serving as financial advisors to Warner Bros. Discovery and Wachtell Lipton, Rosen & Katz and Debevoise & Plimpton LLP are serving as legal counsel.
In pre-market trading on Friday, Warner Bros. Discovery shares were trading at $24.65, up 11 cents, while Netflix was down to $100.97, off 2.2%.
Paramount Skydance shares were down by 2.2% on word that it did not convince WBD that its bid for Warner Bros. was worthy of consideration after assailing the sale process in a letter to the WBD board.
