Netflix and Warner Bros. Discovery have entered into a definitive agreement under which Netflix will acquire Warner Bros., including its film and television studios, HBO Max and HBO.
The cash and stock transaction is valued at $27.75 per WBD share (subject to a collar as detailed below), with a total enterprise value of approximately $82.7 billion (equity value of $72.0 billion). The transaction is expected to close after the previously announced separation of WBD’s Global Networks division, Discovery Global, into a new publicly-traded company, which is now expected to be completed in Q3/26.
Under the terms of the agreement, each WBD shareholder will receive $23.25 in cash and $4.501 in shares of Netflix common stock for each share of WBD common stock outstanding at the closing of the transaction. The transaction values Warner Bros. Discovery at $27.75 per share, implying a total equity value of approximately $72.0 billion and an enterprise value of approximately $82.7 billion.
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 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 was unanimously approved by the boards of directors of both Netflix and WBD. In addition to the completion of the separation of Discovery Global (WB’’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 is acting as Netflix’s financial advisor and Skadden, Arps, Slate, Meagher & Flom 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 are serving as legal counsel.
