Netflix‘s stock fell in early trading Friday after the company announced a debt-fueled deal to acquired Warner Bros. Discovery’s studios and HBO Max streamer — while investors pushed WBD stock to its highest levels in more than three years.
Shares of Netflix dropped more than 2% Friday, while WBD stock was up 2.1% to more than $25/share. For Warner Bros. Discovery, that is the highest its stock price has been since it closed at $26/share on April 13, 2022, after Discovery Communications closed its WarnerMedia acquisition.
Netflix and Warner Bros. Discovery announced the deal Friday before the market opened. The deal carries an equity value of $72 billion and an enterprise value of (including debt) of $82.7 billion, the companies said. WBD shareholders will receive $27.75/share in cash and stock in Netflix under the pact.
Netflix said it expects to see $2 billion-$3 billion in cost savings annually by the third year after the WB deal closes. The company expects the transaction to be accretive to earnings per share by year two.
The companies said they expect Netflix’s deal for Warner Bros. studios and HBO Max to close in 12-18 months, following WBD’s already planned split into two entities — Warner Bros. studios and streaming and Discovery Global, largely comprising its TV networks — by the third quarter of 2026.
In an SEC filing Netflix said it has secured $59 billion in debt financing from Wells Fargo, BNP Paribas and HSBC to finance the deal.
