What Happened?
Shares of global entertainment and media company Warner Bros. Discovery (NASDAQ: WBD) jumped 5.6% in the morning session after Paramount launched a hostile, all-cash takeover bid to acquire the company for $30.00 per share, representing a superior offer to a recent deal with Netflix.
The unsolicited offer from Paramount Skydance, valued at an enterprise level of $108.4 billion, directly challenged a prior agreement for Netflix to purchase Warner Bros. Discovery. That deal, announced just days earlier, valued the company at $27.75 per share, or about $83 billion in total. Paramount stated its proposal provided shareholders with a superior alternative and offered a more certain and quicker path to completion. The significant jump in Warner Bros. Discovery's stock price reflected investor reaction to the higher, all-cash bid.
After the initial pop the shares cooled down to $27.26, up 4.7% from previous close.
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What Is The Market Telling Us
Warner Bros. Discovery’s shares are very volatile and have had 22 moves greater than 5% over the last year. In that context, today’s move indicates the market considers this news meaningful but not something that would fundamentally change its perception of the business.
The previous big move we wrote about was 6 days ago when the stock gained 3.2% on the news that reports revealed that streaming giant Netflix made a mostly cash offer to acquire the company. The bid was part of a second round of offers for the TV and film group, with other suitors including Paramount Skydance and Comcast also submitting revised, binding proposals. According to reports, the bids were placed before the Warner Bros. Discovery board, signaling the sale process was moving into its final stages. Netflix's offer was reportedly for the company's studio and streaming assets. This development fueled market expectations for an acquisition, boosting investor confidence and sending the company's stock to a new 52-week high.
Warner Bros. Discovery is up 156% since the beginning of the year, and at $27.26 per share, has set a new 52-week high. Investors who bought $1,000 worth of Warner Bros. Discovery’s shares 5 years ago would now be looking at an investment worth $970.52.
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