Netflix Is Buying Warner Bros. Discovery for $72 Billion. Here's What It Means for Investors

• Streaming elephantine Netflix is acquiring Warner Bros. Discovery successful a cash-and-stock woody valued astatine $27.75 per share.

• The acquisition volition bring HBO Max and each of its contented into Netflix’s ecosystem.

• The woody is expected to beryllium finalized successful precocious 2026.

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Streaming elephantine Netflix (NASDAQ: NFLX) conscionable announced its largest acquisition ever. The institution plans to get definite assets owned by Warner Bros. Discovery (NASDAQ: WBD) for $72 billion.

This is somewhat uncharacteristic of Netflix, which typically relies connected contented it produces itself and licensing deals to diagnostic contented owned by 3rd parties. So, present are the details of the woody and what Netflix's investors should support successful mind.

Netflix announced that it volition get the HBO Max streaming work arsenic good arsenic the Warner Bros. movie workplace from Warner Bros. Discovery. The woody values the institution astatine $27.75 per share, which implies a $72 cardinal equity valuation for the assets. The institution volition besides presume $10.7 cardinal successful nett indebtedness connected Warner Bros. Discovery's equilibrium sheet.

The acquisition is simply a cash-and-stock deal. Warner Bros. Discovery shareholders volition person $23.50 successful currency for each stock they own, positive $4.50 successful Netflix stock.

Netflix investors should beryllium alert that the institution is financing this woody chiefly with debt. In summation to the $10.7 cardinal successful nett indebtedness the acquired institution brings, Netflix is taking connected an further $50 cardinal successful indebtedness to money the purchase.

It's besides important to clarify that the tv networks owned by Warner Bros. Discovery are expected to beryllium spun disconnected earlier the woody is finalized. This includes TNT and CNN, among different notable media outlets. Netflix clarified that it plans to support operating the Warner Bros movie and tv studios, including theatrical releases of movies.

The acquisition brings immoderate of the astir fashionable TV and movie franchises successful past into Netflix's ecosystem. On the tv side, this includes franchises similar Friends and The Big Bang Theory, arsenic good arsenic HBO bid specified arsenic The Sopranos and Game of Thrones. And it includes the Harry Potter movie franchise, among galore others.

After the woody was announced, Warner Bros. Discovery shares roseate by astir 3% to $25.30 arsenic of 10 americium EST. However, the banal had already accrued sharply successful caller months, arsenic a woody was wide anticipated.

It's worthy noting that this is inactive astir 10% beneath the acquisition price, which seems just considering the astir one-year clip skyline until the expected closing of the acquisition and the regulatory hurdles that inactive request to beryllium cleared. So, Warner Bros. Discovery shareholders request to determine 2 things: