EU Approval Clears Paramount Bid for WBD, Intensifying Bidding War

What happened

The European Commission has approved Paramount Skydance Corporation's acquisition of Warner Bros. Discovery, removing a major regulatory hurdle for the competing bid. This approval comes amid a contested process where Netflix had previously agreed to an all-cash $27.75/share transaction, with a shareholder vote expected by April 2026. The stock now trades at ~$28, above Netflix's offer, reflecting market expectations of a higher bid. The EU green light strengthens Paramount's position, potentially forcing Netflix to raise its offer or risk losing the deal. However, US antitrust review and shareholder votes remain gating items, and the outcome still hinges on competing proposals and proxy battles.

Implication

The regulatory approval significantly de-risks the Paramount bid, making a competitive bidding scenario more likely. Investors should monitor for revised offers from Netflix or Paramount and vote outcomes. The stock's current price near $28 leaves limited upside from the base case, but if a higher bid materializes (e.g., $30+), there is potential. Downside risk if no higher bid and deal fails, with a floor around $22 per DeepValue bear case.

Thesis delta

The EU approval shifts the balance of power: Paramount's bid is now more credible, increasing the probability of a higher acquisition price. The prior thesis focused on Netflix's deal as the primary path; now the market may price in a bidding war. This could improve upside potential but also adds complexity and timing risk.