Bidding War: Paramount Makes a Hostile Bid for Warner Bros. After Netflix Deal
- Peak Frameworks Team
- 2 days ago
- 5 min read
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Overview
On December 5, 2025, Warner Bros. Discovery agreed to an offer made by Netflix to acquire its studios and streaming businesses in an ~$83bn transaction.
Just a few days later on December 8, 2025, Paramount launched a competing all-cash tender offer to acquire Warner Bros. Discovery for $30/share, valuing the company at an enterprise value of ~$108bn. This is a big step up from the ~$27.75/share offer made by Netflix which is made up of a mix of cash ($23.25) and stock ($4.50).
The key differences:
Netflix: friendly, board approved merger, mixed consideration (cash plus Netflix stock), only the studios and streaming business, plus a levered cable spin off.
Paramount: unsolicited tender offer for all of WBD, including the Global Networks segment, at a single cash price. It is explicitly positioned as a superior, cleaner, faster alternative, and it is being taken straight to shareholders.
We now have a live bidding war: a signed Netflix deal with a hefty break fee on one side, and a hostile cash tender from Paramount on the other.
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What is a Hostile Bid?
A hostile bid simply means the target board does not support the offer.
In a normal, friendly deal:
The acquirer negotiates terms with the target board.
The boards sign a merger agreement.
The target board recommends that shareholders vote in favor.
In a hostile takeover attempt, the acquirer either:
Makes a tender offer directly to shareholders, asking them to sell their shares at a premium, or
Runs a proxy fight to replace the board with people who will approve a deal.
Paramount is doing the first version: a hostile tender offer. The company is publicly offering $30 in cash per WBD share and asking shareholders to tender, even though the WBD board has already endorsed the Netflix transaction and told investors to sit tight while they review Paramount’s bid.
The “hostility” is about the relationship with the board, not the mechanics. Legally, it is just another pathway to acquire control.
Why is Paramount Going Directly to Shareholders instead of the Board?
Paramount’s press release is pretty clear: they say they made six proposals to WBD over roughly three months, and the board still chose to sign with Netflix.
They argue that the Netflix deal underpays for WBD and leaves shareholders stuck with a heavily levered cable stub whose future value is uncertain.
At this point, Paramount has two options:
Keep negotiating quietly and hope the board changes its mind.
Escalate by going public and taking the offer directly to the shareholder base.
They chose the second option. In practice, that means:
Paramount files tender offer documents with the SEC.
It offers to buy WBD shares from any shareholder who wants to tender at $30/share in cash.
The WBD board is required to respond with a formal recommendation (accept, reject, or neutral) within a set period (typically 10 business days).
What is more typical?
The normal sequence in large strategic deals is:
Quiet discussions between management and boards.
Negotiated merger agreement.
Public announcement and board recommendation.
Hostile tenders are less common in mega cap strategic transactions, but they do happen when:
The target board prefers a different buyer or structure (here, Netflix).
The bidder thinks the board is blocking a deal that shareholders would accept.
The bidder wants to apply public pressure and potentially trigger activism.
Paramount is effectively saying: “We think the board is not putting the best offer in front of you, so we are going to give you a chance to choose directly.”
How Does Paramount's Bid Compare to Netflix's?
You can think about this in three buckets: price, structure, and execution risk.
1. Price
Netflix deal: headline value of $27.75/share before any Net Debt Adjustment made up of $23.25 in cash + $4.50 in Netflix stock value per WBD share. That implies ~$72bn of equity value and $82.7bn of enterprise value for the part of WBD Netflix is actually buying.
Paramount tender: $30 in cash per WBD share for the whole company, implying about $108.4bn of enterprise value and ~$18bn more cash than the Netflix package.
On pure headline economics, Paramount is clearly outbidding Netflix.
2. Structure
Netflix: WBD first spins off the Global Networks business into a separate, levered SpinCo. Netflix then buys only the studios and streaming business with a mix of cash and Netflix stock. WBD shareholders end up with cash, a slice of Netflix, and shares in a standalone cable company.
Paramount: One step: buy all of WBD, including networks, for cash. No SpinCo, no stock collar, no stub.
Paramount is offering a simpler outcome for shareholders, while taking on the full WBD footprint itself.
3. Execution risk and approval process
Netflix path (friendly merger plus spin):
WBD does an internal reorg, drops Global Networks and related assets and liabilities into SpinCo, and distributes SpinCo shares to existing WBD holders.
WBD shareholders vote on the Netflix merger; a majority of the voting power has to approve.
The combined Netflix plus WBD business then runs through antitrust and other merger reviews in the US, Europe, and other key markets.
At closing, Netflix pays the cash piece, issues the stock piece, and the Retained Business becomes a Netflix subsidiary.
If regulators block it, Netflix owes WBD about $5.8bn. If WBD walks to a superior deal or withdraws its recommendation, WBD owes Netflix about $2.8bn.
Paramount path (hostile tender plus second step merger):
Paramount launches a tender offer, currently set to run to January 8, 2026, unless extended, and WBD’s board has to respond with a recommendation within the required 10 business days.
Shareholders decide whether to tender into the $30/share cash bid. If Paramount gets to a high enough ownership level, it can follow with a back end merger to squeeze out the remaining minority at the same price.
Paramount still needs antitrust clearance and other regulatory approvals, though it is pitching its deal as more pro competitive than Netflix plus WBD.
How Should Investors View This?
At a high level, WBD holders are now choosing between:
The Netflix baseline: ~$27.75/share in cash and stock, plus SpinCo, with a more complex structure and a long regulatory runway.
The Paramount offer: $30/share in cash for the whole company via a hostile tender, with a different antitrust story and real execution risk.
The value question is straightforward; the hard part is figuring out regulatory outcomes, Paramount’s ability to actually close, whether the WBD board eventually flips, and whether a third bidder shows up.