Surprisingly high merger price alters shareholder value for both
Netflix (NAS: NFLX) plans to pay 25 times estimated 2026 EBITDA for Warner Bros.’ streaming and studios business, which strikes us as exorbitantly high, even with the premier, unique assets Netflix will acquire. Regulatory approval is highly uncertain.
Why it matters: Warner Bros. Discovery shareholders win big if the deal is approved. In addition to $27.75 per share in cash and Netflix shares, they will still hold the remaining Discovery Global business, worth about $3 per share at the $27 billion enterprise value we think is reasonable.
- It will be difficult for Netflix to realize the full value of its $83 billion investment, especially considering the overlap of HBO Max and Netflix subscribers. Netflix doesn’t need to tap HBO…
