This week, we're diving into a flurry of major M&A activity from GE’s $2.3B healthcare tech acquisition to Violia’s $3B hazardous waste deal and a massive offshore wind farm stake sale by Denmark’s Ørsted. But the spotlight is on Warner Bros. Discovery, where a high-stakes bidding war is heating up.
With Paramount, Netflix, and Comcast all circling, Anthony and Piers unpack why the media giant rejected multiple multi-billion dollar offers and how strategic tension is being used to push up valuations. Is splitting the company more valuable than selling it whole? And what’s the endgame for each suitor?
(00:00) Rate Cut Hopes & Market Moves
(07:34) M&A Roundup: Paint, Healthcare & Waste
(10:27) Wind Power Play: Ørsted & Apollo
(12:39) Warner Bros vs Paramount
(24:34) Netflix & Comcast Join the Fray
(32:00) Who Buys the Crown Jewels
Mark as Played
Transcript
Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
(00:00):
Hello and welcome back to the Market Maker podcast.
And no usual macro wrap from us last week.
So what we thought we'd do is just go over a couple of the the
headlines from macro perspective, a couple of deal
headlines and then do a bit of adeep dive into Warner Brothers
and they're evolving bidding saga and a kind of sell side
(00:22):
strategy, perhaps because there's multiple bidders at the
table here, all with very different needs and desires.
So firstly, on the kind of macromarket side, last week, very
much dominated by renewed hopes of US Federal Reserve interest
rate cuts to come in December. I think the market pricing from
(00:42):
when we're recording this on Friday the 28th is at 85%.
Now a lot of Fed speakers comingout.
So what was looking a little bitmore not so sure has become
close to to locked in, at least at this point in time.
Still a little bit of time to go.
A couple of other things that stood out last week on the on an
individual stock side was NVIDIA.
(01:04):
There was a day where you had a pretty much mirror opposite
effect with NVIDIA dropping nearly 3% and Google rose almost
3% in one day. And Google really top performer
last week, up around 10% in justthe week or so.
A lot of this was coming after NVIDIA shares fell on reports
that Meta was in talks to adopt Google's AI chips for its data
(01:29):
centres, signalling a potential challenge, obviously, to
Nvidia's dominance, which we've talked about a lot in recent
episodes. It comes after Google secured a
deal to supply 1,000,000 TP US by Anthropic TP US Piers.
Yep, Google's version of the GPU, basically.
(01:52):
Right. So these are these are custom
designed chips developed by Google for accelerating machine
learning tasks. So, yeah, yeah, I mean as as
that grows, as they grow in their dominance and the clouds
that they also operate, that whole sphere makes a lot.
Of sense I'll just say they've been developing those TP us for
(02:12):
like a decade. You know, This is why Google
just quietly behind the scenes, you know, are actually, you
know, well established. I don't know what I think
they're on version 7 or 8 even of of the TPU.
So, so, you know, very well established technology.
So look, they they've grabbed a bit of potentially put the cat
(02:34):
amongst the pigeons with regardsto Nvidia's dominance.
But then also at the same time, they dropped a new version of
Gemini, which has turned out to be, you know, very impressive
and and possibly better than itsrivals.
So now it's also, yeah, threatening ChatGPT and open AI,
(02:55):
let's say, for market share on that side as well.
So yeah, pretty good week for the Googlers.
Yeah, I'm a long time Google, soAmen brother.
So the other things are Wall Street's macro traders.
I saw some statistics last week.They're on track for their best
year since 2009. Well, you can imagine the
(03:16):
volatility in O 9. So firms like Goldman, JP,
they're expected to generate $165 billion from fixed income
credit commodities trading. So, yeah, I mean, 2025 has been
probably even more wild than we would have thought right at the
beginning of the year, just generally from a volatility
perspective. Absolutely.
(03:38):
I mean, yeah, yeah, I mean, it'sbeen it's been a remarkable year
and it's not done yet, but obviously the Trump sort of
liberation day start of April kicked off a monster sell off.
It's Can you believe the S&P 500touched 5000 a few days after?
(03:59):
Well, but yeah, only just just went below, right below 5000 and
we're trading, you know, well, knocking on the door of well,
I'll just say 7000 isn't beyond sort of out of reach for year
end. We're trading 6822 right now.
But yeah, even just a little bitof Vol bounce of volatility.
(04:21):
So even over the last few weeks,as you were saying, you know, we
had a bit of a wobble as interest rate cut expectations
dropped and perhaps the Fed up is right.
And so, but now, but now those rate expectations have gone back
up. So 85% locked in for a cut.
So the S and PS nicely rebounded.
(04:42):
It hasn't got back to the highs,but it's not far off.
And then finally on, on the macro side, the UK budget, I
don't think there's any 2 great shakes there from a market
reaction perspective, Key measures, state pension
increase, income tax threshold freezes, new taxes on your EV,
I'm afraid. Well.
(05:04):
It's a double hit for you, isn'tit?
New taxes, electric vehicles, any cuts to venture capital,
trusts, VCT, tax relief. I mean, I know you're, you're
such a big VC player. Yeah, not happy.
Well, the interesting thing, yousee Jamie Dimon, so straight
after the budget announced that JP Morgan will be building a
(05:28):
mega new kind of building in Canary Wharf to make it their
EMEA HQ. It's actually interesting
because JP Morgan were eyeing upa site, it's just like kind of
on the river by Canary Wharf. And they were eyeing this up in
pre crisis, I'm talking 2000 andseven, 2008, and the crisis
happened. So they put up a freeze on that
(05:51):
development and instead, insteadof actually developing that
site, they moved into the old Lehman Brothers building,
obviously, which had been vacated.
So they're actually still there to this day on Bank Street in
Canary Wharf. But now apparently Jamie Damon
has said because of the budget and Rachel Reeves and a steady
hand on the rudder because of that, we are now confident in
(06:15):
the long term stability, blah, blah, blah of the UK.
We're going, we're going ahead, we're pressing the button and
we're doing our mega build in Canary Wharf.
That's an endorsement for Reeves.
I mean, and Diamond's pretty aligned politically.
You know, he's always been in and around the administration,
the existing administration. So to go in cahoots with the
(06:37):
Labour Party, really backing them after what was quite a
tricky balancing budget, that's interesting.
I mean, he is a Democrat, right?So he is kind of from the the
left side of the house. So he should align with Labour.
But Democrats are normally a little bit more central than
Labour is here in the UK. But but still, yeah.
(07:00):
Yeah, quick stat check. It's going to be 3,000,000
square feet that building. So it's going to be, well, I
want to double the floor space of Britain's current tallest
building, The Shard. Wow, it's just crazy talk.
I mean, I've walked past their new building in Manhattan,
Midtown Manhattan a few weeks ago when I was in New York.
(07:22):
That is amazing. That's an amazing building.
So there. Yeah, Diamond is is he's not.
He's not shy on getting the checkbook out on the real estate
side. That's your legacy right there
though, isn't it? But.
Indeed. All right, well, look, quick,
quick run through some headlineson some deals before the deep
(07:42):
dive section. So Axon Nobel and Exalta which
was one where we covered just a week or so ago, they agreed to
that all stop merger of equals that create a $25 billion global
paint and coatings giant. The latest there is that within
a couple of days of that going out to Exalter shareholders,
Artesian Partners and Shapiro Capital, they represent about
(08:05):
circle. 1.7% of Exalter publiclyattacked the deal, essentially
signaling they'll vote no unlessterms are improved or
alternatives explored. Another one, GE Healthcare
Technologies acquiring medical imaging software provider
Intelerad for $2.3 billion. The deal aimed at extending G ES
(08:27):
imaging footprint beyond hospitals into outpatient.
And I'm going to use the American ambulatory settings
accelerating its shift toward SAS higher recurring revenue
model and then Veolia Environment acquiring US
hazardous waste. So M&A, you know, it's not
(08:49):
always the sexy tech deals that are going on.
More often than not from a volume perspective, it's ones
like this right where Veolia Environment acquiring US
hazardous waste specialist CleanEarth from NVIRI for about $3
billion in cash, a move that will double Veolia's US
(09:09):
hazardous waste footprint and make it the number two player in
that market. So significant one for that
specific space. And then final two, KKR LED
consortium has sold the 700 plusroom Hyatt Regency in Tokyo in
the Shinjuku to identify it as an unidentified buyer for over
(09:30):
$800 million. Interestingly, on that one,
people familiar with the deal said the sale likely generated
around 2X the consortium's original investment.
That original investment was only two years ago.
Right, good trade. So strong demand.
Prime Japanese hospitality assets.
KK Rs Ongoing portfolio rotationin Japan and then the last one
(09:55):
again. I previously covered major deal
Anglo Americans proposed circa $17 billion takeover of tech
resources to form Anglo Tech, the $53 billion copper giant.
Political headwinds are coming thick and fast at the moment
after Canadian Industry MinisterMelanie Jolie said that the
(10:15):
company's current commitments are not enough to meet Canada's
revised industrial strategy. So yet still 1 to get over the
line there. Finally, comments, we always
encourage comments if someone has something to say or a deal
to investigate. We had Matthew who said that I
(10:36):
was wondering if you cover an M and a deal in the renewable
energy like on wind, for example.
So very quickly, Denmark's Ofsted is selling a 50% stake in
its Hornsey 3 offshore wind farmin the UK to Apollo for about 39
billion Danish krona. That's about just over 6 billion
(10:57):
U.S. dollars. That's a deal widely seen as
crucial to avoiding a crippling credit rating credit rating
downgrade. Apollo, which manages over 800
billion in assets, isn't just buying half the project, it's
also committing to fund 50% of the remaining construction
costs. And that's for construction
costs in an £8.5 billion development.
(11:20):
So that's a big commitment there.
Or, or a move of intent. Horn C3.
What is that? It's a 2.9 GW offshore wind
project in the North Sea that's expected to become the world's
largest offshore wind farm when it comes to 9 in 2027.
For context, generating enough power for more than 3,000,000 UK
(11:44):
homes when? So when I saw that, I was kind
of like, yeah, that's, that's a lot.
And then I saw the context of the three million homes and I
was like, it's not that much, actually, no.
It's a lot of money for just three million homes, yeah.
But there you go. I don't.
I mean, I'm not a wind specialist, I'm sure.
I don't know what. The good example is after that,
(12:06):
the one, the interesting thing here, like Apollo, yeah, there's
been a a trend, a theme in recent years where the big boys,
the big, big asset managers are moving more into infrastructure.
So BlackRock have been doing it as well.
So this is a good example. And it's just that that
infrastructure base that once built and all right, that's a
(12:26):
big investment to get that thingfully built.
But then you know the idea is itkind of throws off very
consistent income which is attractive for their kind of
portfolio mix. Cool.
All right, Well, Warner BrothersDiscovery, the parent of HBO and
CNN, might be more familiar to many.
(12:46):
The news last week that they hadasked potential buyers to submit
new sweetened offers after receiving an initial round of
bids, according to basically people who are familiar with the
deal talks. So, yeah, let's talk talk this
one through then how do we arrive at this point?
What? Why are Warner Brothers
(13:07):
Discovery looking to offload a few different assets here?
Who are the the the parties involved who could be interested
in taking what? Yeah, it's, it's an interesting
one because there's a back storybecause this Yeah, you you say
Warner Brothers, but but of course it's not.
It's, it's Warner Brothers Discovery and there was a mega
merger back in 2022 where WarnerBrothers and Discovery separate
(13:30):
businesses merged together. And actually the long, you know,
one of the points and one of thekind of rationale strategies for
that merger back then was to wasto actually merge the two and
then kind of split the combined entity into then two separate
businesses. Because here what you've got is,
(13:52):
you know, you've got all your, your kind of sexy snazzy stuff,
your Warner Brothers Studios, your HBO, you know, your
streaming services, you know, modern, the, the way people
consume television and content these days, right?
Your streamers, you've got all of that stuff.
So that's Warner Brothers Studios, HBO Max and so on.
But then you've got all the legacy stuff, the cable networks
(14:13):
you mentioned, CNN, TNTTBS, Discovery, Food Network, right?
This is all the old stuff. And the idea was that they were
going to split the two and then look for potential buyers,
right? And the strategy was to finish
that kind of split at some pointnext year.
(14:34):
But whilst that's going along and they're trying to execute on
that strategy, you then have potential suitors coming and
sniffing about. And so actually this started
back in September. So before Warner Brothers
Discovery officially put themselves up for sale, they
only put themselves up for sale last month.
Before that in September. What triggered all of this was
(14:56):
actually Paramount coming along and submitting an unsolicited
bid for the entire combined business.
So pre split up in 2026, Paramount saying we'll, we'll,
we'll just come in and Hoover the whole lot up now.
So they bid $19.00 per share unsolicited bid back in in
(15:16):
September. Ultimately the board didn't
accept it. They said like this is this is
this doesn't value us appropriately.
We're going to crack on with ourwith our original plan and we're
going to kind of split this business next year.
Then Paramount came back with animproved terms.
They moved from 19 dollars firstbid to 22 bucks again still for
(15:41):
the whole business, right. And look the logic here for
Paramount, they want to scale incontent, you know, marketing and
technology. Obviously cost synergies are
always ever present in these kind of big mega deals, but
again, the Warner directors chose to, well, chose to not
engage. I mean, they're, they're just,
(16:02):
yeah, not only are they rejecting these, they're not
even prepared to talk to Paramount about this and kind of
dismissing it out of hand. So then we moved to mid-october
and Paramount go bid #3 raise the bar again to 23 1/2 dollars.
And not only was it more, more kind of higher valuation, there
(16:25):
was a much bigger cash element to the, to the make up of this
deal. And actually they pushed it to
80% cash. So obviously as a seller, you
know, you can either receive cash or it might be stock,
right? So shares in the buying firm.
But of course, you know, from a shareholder's point of view, you
know, the, the larger the cash element of the deal, the better
(16:48):
in most scenarios. And so, you know, increasing the
cash elements always more attractive.
However, obviously for Paramount's point of view,
they've got to stump up more cash.
So there's, there's kind of a more complex kind of financing
situation that's that's then required.
They also not only did they up the proportion of cash, they
(17:09):
also increased what's called thereverse termination fee.
So that's if the, if the potential buyer pulls out at any
point during the deal, because obviously, you know, these
deals, it's not like just buyingsomething off the shelf, right?
There's a lot of what's called due diligence involved in these
deal processes where the buyer is, is really deep diving into
(17:31):
every element of the business that they're buying to check
that, you know, what they're buying is what they thought they
were buying. And there's no kind of skeletons
in the closet as it were. So there is risk.
And so they increased their reverse termination fee to $2.1
billion. You know, we're not messing
about with the amount of money here.
So anyway, you know, also they said actually David Zaslav would
(17:57):
also stay on as Co chief executive.
So it's like multiple kind of improvements to the bid there
for their third attempt mid-october and the Warner
Brothers discovery board. No thanks.
So look, they're playing a pretty, yeah, pretty punchy game
(18:18):
here, these Warner Brother Discovery lot by, you know,
continually rejecting these everimproving terms.
But of course, what's happening at the same time is this very
much puts Warner Brother, you know, Discovery in play if
you've got a very persistent suitor who's chasing you and you
(18:38):
keep rejecting them. But obviously this just brings
you into the spotlight. And so in the end, they've
decided to play hardball and it's it's pretty aggressive.
But in the end they said, you know what, let's just put
ourselves up for sale officially.
And yes, Paramount, we know we've got one very interested
party at the table. Let's try and get some more at
(19:01):
the table. And ultimately, let's try and
create what we call competitive tension.
And look, it's a supply and demand thing, right?
As my, as my dad always used to say to explain this concept to
me, you know, if you, if you take your pig to market, if
(19:21):
there's a lot of farmers who want to buy your pig, pigs are
expensive. If you take lots of pigs to
market and there are no farmers buying pigs are cheap.
So it's like it's. Just the the Welsh countryside
school system going on here. Yes, indeed.
So look, let's try and bring multiple farmers to the table.
(19:43):
We've got one pig here, you know, it's the business, it's
Warner Brothers Discovery. And let's try and bring multiple
interested parties, create some competitive tension, create a
bidding war, and ultimately, let's get this price.
Obviously, as the seller, let's get this price as high as we
possibly can. And we'll execute a deal.
(20:04):
So I'm assuming that there's there's a reason why they keep
rejecting Paramount. So if Paramount, it sounds like
what you're describing is WarnerBrothers Discovery has lots of
different parts of a business and Paramount want the whole
thing, meaning that they're probably not over overvaluing,
(20:26):
undervaluing. There's probably some
discrepancies behind these different things because like
you said, well, what if the pig be divided into its parts and
there's, there's one of these farmers who goes, I want the
legs. I don't want the body because
I've got a buyer who I'm sellingthe legs on to who just wants
legs so I can make a premium there.
(20:47):
Or I want the back of the pig orthe belly of the pig or whatever
it might be. So isn't, is that what the
problem is here? Is that what a paramount
undervaluing a part of the overall organization And so in
order to almost probably force Paramount up, you could go in,
right, OK, who is some of the gosend the bankers out who are
(21:09):
some other people who could takespecific parts of the business
that could just force their handto increase some of the
component parts of to influence the bigger deal?
Is that what's going on? Basically, yeah.
I mean, I I'm impressed how wellyou've kind of managed to extend
that pig analogy. But I think that based you've
got to get back to the original merger in 2022 and the kind of
(21:31):
strategy rationale behind that. And they are executing their
plan. It'll turn out to be like a four
year plan, right. But the plan was, as I said,
you've got this sexy streaming side of the business and then
you got the old school legacy cable networks side, right.
And the idea was that let's split them up.
(21:53):
And then if you like, the the the sum of the parts is less
valuable than the separate partsonce separated.
And so here's Paramount saying don't separate.
And so, yeah, essentially in theend, don't get the benefits of
(22:13):
increasing value through separation.
We'll just Hoover the whole lot up now.
Now, you know, there is one angle here where executing that
separation is fraught with risk.And it's, you know, that's a
highly complex kind of project that you've got to execute.
So at least for Warner Brothers Discovery at least, the good
(22:34):
thing here is Paramount is saying that we'll, we'll, we'll
basically take that kind of separation project risk off your
hands. So there is a positive in that
sense. They don't have to execute it
themselves now, but yeah, ultimately they want to split
and get greater value for their shareholders by selling the
parts separately. So that's probably the key
(22:56):
reason why they've been batting off Paramount, you know, for the
last few months despite their their kind of third bid being
pretty interesting at 20, you know, 23 1/2 dollars.
And it's interesting that WarnerBrothers Discovery right now are
trading above 23 1/2 dollars as you'd expect because that bid
got rejected and there are othersuitors we'll talk about in a
(23:20):
second. So the markets right now saying
that this thing will get sold, you know, either split and sell
its parts or sell the whole thing to Paramount and it'll get
sold for more than 23 1/2 dollars.
And to put that into context, this share price has ramped.
I mean, it's doubled in value. The the Warner Brothers
(23:40):
Discovery share price was SAT around about 11 bucks before
Paramount started to show their hand.
It's now 24 nearly right. So we're pricing in a big chunk
here. Now you to put that into even
more context though, ultimately post the merger with Discovery,
(24:01):
their share price popped to $27.00 back in 20/22/27 and it's
actually really underperformed since then and it's gone from 27
to 11. Well, actually got it went below
it almost got down to like, well, 6-6 bucks in 2024, right.
So it's had a shocker from a share price point perspective,
(24:23):
performance perspective. But now these bids are coming
in. Yeah, just looking at this, the
last few months, it's doubled invalue.
So it's an interesting one. All right, well, look, there's
some other big names at the table, so yes, they're up.
I'd like to know. So from the Paramount's
perspective, they're the only bidder going for the whole the
(24:44):
whole thing. Yeah.
Gains instant scale film TV. So if you think about those
franchises, Harry Potter, DC, Game of Thrones, all these sorts
of things, one of Hollywood's biggest TV kind of producers.
If you like the other side, combining HBO Max with Paramount
Plus you mentioned there createsthe much stronger streaming
(25:08):
bundle and spreads content and tech costs over a much larger
base. And then a merge studio group
would control roughly 1/3 of North America's box office,
giving more pricing and marketing power in theatres.
So that's the Paramount story. What about the others then that
have come into the mix? So the other two, so remember
(25:31):
they officially put themselves up for sale, OK to try and
attract in more farmers. Well, the other two farmers, you
might have heard of Comcast and Netflix.
So these aren't, you know, thesearen't, I mean, it's obviously a
massive deal. You know when we're talking
about 23 1/2 bucks or higher pershare, we're talking $60 billion
(25:52):
of evaluation here, right? I thought Netflix doesn't
normally come to the the market in the in the village.
I thought normally they rear their own pigs.
Well, this is indeed true. Because Netflix.
Yeah, Interestingly, yeah. So that they're there rather
than a buy and build as in an M and a sort of strategy, though
(26:13):
they've been organic. Let's let's create content
ourselves, right? And they've spent ridiculous
amounts of money on that over the years, but have now very
successfully positioned themselves as the kind of king,
king streamer. And, and yeah, so sorry,
actually the, the biggest deal they've ever done was only $680
million. So obviously to now step in and
(26:37):
do a 60 billion, I don't know. But of course Netflix aren't
interested in the 60 billion, I should say.
And I don't know what the valuations are of the component
parts once split, but I would assume obviously the streaming
part I would assume would be a lot more valuable.
I don't know what proportion of that overall 60 billion
(26:58):
valuation that part would get, but it's going to be 10s of
billions of dollars, obviously. So it's interesting here that
Netflix are willing to get the checkbook out in a way that they
have never, ever, ever done so before.
I wonder whether a lot of this is a defensive play where it's
just that they just don't want anybody else to get their grubby
(27:20):
mitts on these, you know, these nice assets.
And so, you know, it's just kindof buying using their cash and
their cheque because look, they've got money, right?
They've got their, their cash flows are, are ridiculous.
So they can, they can do this deal.
But I wonder from a, it just seems out of sorts for them from
a kind of strategic kind of growth point of view.
(27:40):
And so I wonder whether now they've become the giant that
they are, they're kind of almostinto a new, new chapter of their
strategy in a way. And it's now it's, it's a
defensive play more than anything to buy this and no one
else gets it. And then Comcast, what, what's
some of the specifics on them? Yeah, I mean, so they're
interested in the Warner Brothers Studios, HBO and
(28:02):
streaming. They're they're also like
Netflix, I should say. Neither of them are interested
in the cable networks kind of legacy stuff.
So and you know, they want to bolt it onto their Universal and
something called their Peacock. I don't I haven't heard of
Peacock, but you know, that's onthe kind of streaming side.
So it also deepens its film and TV library.
(28:25):
So you know, adding that premiumHBO originals, strengthening
both its licensing business and its direct to consumer offering.
It further consolidated traditional Hollywood by
basically putting up another major studio under the NBC
Universal umbrella. So cost synergies, revenue
(28:45):
synergies in the mix there, but also then sees the precedent in
the Disney Fox deal as evidence that regulators might still
clear a big studio combination if structured carefully.
Because obviously like all thesemonster deals, the, the, there's
always regulatory risk. And so, and, and there are
regulatory factors with any one of these three buyers, you know,
(29:09):
potentially doing a deal here. So Comcast, I don't, I wouldn't
say the regulatory risk is necessarily higher with Comcast
than it is with the other two. But so yeah, 33 interesting
three interested parties. I mean, what what's what's
unusual about this is that yeah,they're coming.
These three are coming. Well, Paramount want the whole
(29:32):
business, whereas Comcast and Netflix almost want to do a post
split deal. So you've got, you know, three
players with three different strategies, competitive tension.
And by the way, I should say they've all submitted their
initial bids. We don't know what those are
because this, you know, they, they haven't, Warner Brothers
(29:54):
Discovery have not revealed that.
But what we do know is the bids weren't high enough.
You've got to assume Paramount bid 23 1/2 dollars at least
because that was their final bidthat got rejected back in
October. So we that's why the share price
is higher than that right now. We don't know how much higher,
but Warner Brothers Discovery has said no, not good enough.
(30:16):
Come back to us with final bids 1st of December.
So this is pushed into next weeknow and then we'll see who wins.
I actually think that the bankers have really done a good
job here. They've earned their fees on the
Warner Brothers Discovery side. You actually think that it's
going to go Paramount the whole way?
(30:38):
Yeah. They've just brought in these
other players to just juice those other parts to get an
extra premium, let's say on the streaming side, for example,
just to lift it a little bit. Obviously comes with a lot of
risk as a strategy because your share price is up 90%.
If Paramount decide to go, do you know what?
(30:59):
It's now too rich and I don't like how this has gone for, but
we all know that, you know, business doesn't quite work like
that. You know, there's no room for
ecos when it comes to potential money making deals here on the
Paramount side. So I actually think this is all
just a strategic hand of really well executed strategy on the
(31:22):
side of the advisors who've justbrought in some of these big
names. Like you said with Netflix, I
just think that Netflix given what you described is just not a
big acquirer. They're going to, they're going
to be so price sensitive as a bidder.
Paramount have already just gonelike 19, 2020, 223 1/2.
(31:49):
We'll throw in the cash component.
We'll give this, we'll have someblack board representatives like
they aren't, they are obviously willing to go well and above the
others. Yeah.
It will be interesting because you've got some serious, serious
content for sale on the table here.
Harry Potter, you know that all the DC stuff, you've got Game of
(32:15):
Thrones, you know, this is this is proper content that you know,
it stands the test of time, right?
It's not like you're going to watch Harry Potter once and
never watch it again. You're coming back and back and
back and back. So from a kind of subscription
getting sticky subscribers, you know, that kind of content is
seriously valuable. So you know, it'd be interesting
(32:38):
with with Netflix and just how you know, how are they properly
changing their strategy here? Are they into a new chapter with
regards to their business or not?
But then like final point for meis like ultimately for Warner
Brothers Discovery, ultimately they have a plan.
All right, They had a plan before all this happened.
(33:00):
It's let's split the business and sell the component parts to
get maximized value. Now if Paramount can basically
take them out of that process bybasically giving them the post
split value without them having to execute the split, well I
mean obviously that's the best option.
(33:20):
It's just can Paramount get the price high enough for for them
to accept that path? And also, if we, you know, for
whatever reason have cold feet, find something we don't like,
you get 2.1 billion for your foryour time as that reverse
termination fee. Exactly.
(33:42):
Better than, you know, kick in the nuts.
But all right, well, look, hope,I hope Pierce's pig farm analogy
is something new to your M&A strategy playbook.
You can roll that out at your next interview that you have.
Oh, I'd love it. Come back and tell me how it
(34:03):
goes if you do. All right, so yeah, as per
usual, let us know if there's any questions, any other deals
that you think are worth highlighting in the next
episode, Just drop us a comment.If you're not already following
the channel, please do hit subscribe if you watch your
YouTube or follow and subscribe on Spotify and Apple podcast.
(34:24):
But have a great week ahead. Thanks, Piers.
Hello and welcome back to the Market Maker podcast.
And no usual macro wrap from us last week.
So what we thought we'd do is just go over a couple of the the
headlines from macro perspective, a couple of deal
headlines and then do a bit of adeep dive into Warner Brothers
and they're evolving bidding saga and a kind of sell side
(00:22):
strategy, perhaps because there's multiple bidders at the
table here, all with very different needs and desires.
So firstly, on the kind of macromarket side, last week, very
much dominated by renewed hopes of US Federal Reserve interest
rate cuts to come in December. I think the market pricing from
(00:42):
when we're recording this on Friday the 28th is at 85%.
Now a lot of Fed speakers comingout.
So what was looking a little bitmore not so sure has become
close to to locked in, at least at this point in time.
Still a little bit of time to go.
A couple of other things that stood out last week on the on an
individual stock side was NVIDIA.
(01:04):
There was a day where you had a pretty much mirror opposite
effect with NVIDIA dropping nearly 3% and Google rose almost
3% in one day. And Google really top performer
last week, up around 10% in justthe week or so.
A lot of this was coming after NVIDIA shares fell on reports
that Meta was in talks to adopt Google's AI chips for its data
(01:29):
centres, signalling a potential challenge, obviously, to
Nvidia's dominance, which we've talked about a lot in recent
episodes. It comes after Google secured a
deal to supply 1,000,000 TP US by Anthropic TP US Piers.
Yep, Google's version of the GPU, basically.
(01:52):
Right. So these are these are custom
designed chips developed by Google for accelerating machine
learning tasks. So, yeah, yeah, I mean as as
that grows, as they grow in their dominance and the clouds
that they also operate, that whole sphere makes a lot.
Of sense I'll just say they've been developing those TP us for
(02:12):
like a decade. You know, This is why Google
just quietly behind the scenes, you know, are actually, you
know, well established. I don't know what I think
they're on version 7 or 8 even of of the TPU.
So, so, you know, very well established technology.
So look, they they've grabbed a bit of potentially put the cat
(02:34):
amongst the pigeons with regardsto Nvidia's dominance.
But then also at the same time, they dropped a new version of
Gemini, which has turned out to be, you know, very impressive
and and possibly better than itsrivals.
So now it's also, yeah, threatening ChatGPT and open AI,
(02:55):
let's say, for market share on that side as well.
So yeah, pretty good week for the Googlers.
Yeah, I'm a long time Google, soAmen brother.
So the other things are Wall Street's macro traders.
I saw some statistics last week.They're on track for their best
year since 2009. Well, you can imagine the
(03:16):
volatility in O 9. So firms like Goldman, JP,
they're expected to generate $165 billion from fixed income
credit commodities trading. So, yeah, I mean, 2025 has been
probably even more wild than we would have thought right at the
beginning of the year, just generally from a volatility
perspective. Absolutely.
(03:38):
I mean, yeah, yeah, I mean, it'sbeen it's been a remarkable year
and it's not done yet, but obviously the Trump sort of
liberation day start of April kicked off a monster sell off.
It's Can you believe the S&P 500touched 5000 a few days after?
(03:59):
Well, but yeah, only just just went below, right below 5000 and
we're trading, you know, well, knocking on the door of well,
I'll just say 7000 isn't beyond sort of out of reach for year
end. We're trading 6822 right now.
But yeah, even just a little bitof Vol bounce of volatility.
(04:21):
So even over the last few weeks,as you were saying, you know, we
had a bit of a wobble as interest rate cut expectations
dropped and perhaps the Fed up is right.
And so, but now, but now those rate expectations have gone back
up. So 85% locked in for a cut.
So the S and PS nicely rebounded.
(04:42):
It hasn't got back to the highs,but it's not far off.
And then finally on, on the macro side, the UK budget, I
don't think there's any 2 great shakes there from a market
reaction perspective, Key measures, state pension
increase, income tax threshold freezes, new taxes on your EV,
I'm afraid. Well.
(05:04):
It's a double hit for you, isn'tit?
New taxes, electric vehicles, any cuts to venture capital,
trusts, VCT, tax relief. I mean, I know you're, you're
such a big VC player. Yeah, not happy.
Well, the interesting thing, yousee Jamie Dimon, so straight
after the budget announced that JP Morgan will be building a
(05:28):
mega new kind of building in Canary Wharf to make it their
EMEA HQ. It's actually interesting
because JP Morgan were eyeing upa site, it's just like kind of
on the river by Canary Wharf. And they were eyeing this up in
pre crisis, I'm talking 2000 andseven, 2008, and the crisis
happened. So they put up a freeze on that
(05:51):
development and instead, insteadof actually developing that
site, they moved into the old Lehman Brothers building,
obviously, which had been vacated.
So they're actually still there to this day on Bank Street in
Canary Wharf. But now apparently Jamie Damon
has said because of the budget and Rachel Reeves and a steady
hand on the rudder because of that, we are now confident in
(06:15):
the long term stability, blah, blah, blah of the UK.
We're going, we're going ahead, we're pressing the button and
we're doing our mega build in Canary Wharf.
That's an endorsement for Reeves.
I mean, and Diamond's pretty aligned politically.
You know, he's always been in and around the administration,
the existing administration. So to go in cahoots with the
(06:37):
Labour Party, really backing them after what was quite a
tricky balancing budget, that's interesting.
I mean, he is a Democrat, right?So he is kind of from the the
left side of the house. So he should align with Labour.
But Democrats are normally a little bit more central than
Labour is here in the UK. But but still, yeah.
(07:00):
Yeah, quick stat check. It's going to be 3,000,000
square feet that building. So it's going to be, well, I
want to double the floor space of Britain's current tallest
building, The Shard. Wow, it's just crazy talk.
I mean, I've walked past their new building in Manhattan,
Midtown Manhattan a few weeks ago when I was in New York.
(07:22):
That is amazing. That's an amazing building.
So there. Yeah, Diamond is is he's not.
He's not shy on getting the checkbook out on the real estate
side. That's your legacy right there
though, isn't it? But.
Indeed. All right, well, look, quick,
quick run through some headlineson some deals before the deep
(07:42):
dive section. So Axon Nobel and Exalta which
was one where we covered just a week or so ago, they agreed to
that all stop merger of equals that create a $25 billion global
paint and coatings giant. The latest there is that within
a couple of days of that going out to Exalter shareholders,
Artesian Partners and Shapiro Capital, they represent about
(08:05):
circle. 1.7% of Exalter publiclyattacked the deal, essentially
signaling they'll vote no unlessterms are improved or
alternatives explored. Another one, GE Healthcare
Technologies acquiring medical imaging software provider
Intelerad for $2.3 billion. The deal aimed at extending G ES
(08:27):
imaging footprint beyond hospitals into outpatient.
And I'm going to use the American ambulatory settings
accelerating its shift toward SAS higher recurring revenue
model and then Veolia Environment acquiring US
hazardous waste. So M&A, you know, it's not
(08:49):
always the sexy tech deals that are going on.
More often than not from a volume perspective, it's ones
like this right where Veolia Environment acquiring US
hazardous waste specialist CleanEarth from NVIRI for about $3
billion in cash, a move that will double Veolia's US
(09:09):
hazardous waste footprint and make it the number two player in
that market. So significant one for that
specific space. And then final two, KKR LED
consortium has sold the 700 plusroom Hyatt Regency in Tokyo in
the Shinjuku to identify it as an unidentified buyer for over
(09:30):
$800 million. Interestingly, on that one,
people familiar with the deal said the sale likely generated
around 2X the consortium's original investment.
That original investment was only two years ago.
Right, good trade. So strong demand.
Prime Japanese hospitality assets.
KK Rs Ongoing portfolio rotationin Japan and then the last one
(09:55):
again. I previously covered major deal
Anglo Americans proposed circa $17 billion takeover of tech
resources to form Anglo Tech, the $53 billion copper giant.
Political headwinds are coming thick and fast at the moment
after Canadian Industry MinisterMelanie Jolie said that the
(10:15):
company's current commitments are not enough to meet Canada's
revised industrial strategy. So yet still 1 to get over the
line there. Finally, comments, we always
encourage comments if someone has something to say or a deal
to investigate. We had Matthew who said that I
(10:36):
was wondering if you cover an M and a deal in the renewable
energy like on wind, for example.
So very quickly, Denmark's Ofsted is selling a 50% stake in
its Hornsey 3 offshore wind farmin the UK to Apollo for about 39
billion Danish krona. That's about just over 6 billion
(10:57):
U.S. dollars. That's a deal widely seen as
crucial to avoiding a crippling credit rating credit rating
downgrade. Apollo, which manages over 800
billion in assets, isn't just buying half the project, it's
also committing to fund 50% of the remaining construction
costs. And that's for construction
costs in an £8.5 billion development.
(11:20):
So that's a big commitment there.
Or, or a move of intent. Horn C3.
What is that? It's a 2.9 GW offshore wind
project in the North Sea that's expected to become the world's
largest offshore wind farm when it comes to 9 in 2027.
For context, generating enough power for more than 3,000,000 UK
(11:44):
homes when? So when I saw that, I was kind
of like, yeah, that's, that's a lot.
And then I saw the context of the three million homes and I
was like, it's not that much, actually, no.
It's a lot of money for just three million homes, yeah.
But there you go. I don't.
I mean, I'm not a wind specialist, I'm sure.
I don't know what. The good example is after that,
(12:06):
the one, the interesting thing here, like Apollo, yeah, there's
been a a trend, a theme in recent years where the big boys,
the big, big asset managers are moving more into infrastructure.
So BlackRock have been doing it as well.
So this is a good example. And it's just that that
infrastructure base that once built and all right, that's a
(12:26):
big investment to get that thingfully built.
But then you know the idea is itkind of throws off very
consistent income which is attractive for their kind of
portfolio mix. Cool.
All right, Well, Warner BrothersDiscovery, the parent of HBO and
CNN, might be more familiar to many.
(12:46):
The news last week that they hadasked potential buyers to submit
new sweetened offers after receiving an initial round of
bids, according to basically people who are familiar with the
deal talks. So, yeah, let's talk talk this
one through then how do we arrive at this point?
What? Why are Warner Brothers
(13:07):
Discovery looking to offload a few different assets here?
Who are the the the parties involved who could be interested
in taking what? Yeah, it's, it's an interesting
one because there's a back storybecause this Yeah, you you say
Warner Brothers, but but of course it's not.
It's, it's Warner Brothers Discovery and there was a mega
merger back in 2022 where WarnerBrothers and Discovery separate
(13:30):
businesses merged together. And actually the long, you know,
one of the points and one of thekind of rationale strategies for
that merger back then was to wasto actually merge the two and
then kind of split the combined entity into then two separate
businesses. Because here what you've got is,
(13:52):
you know, you've got all your, your kind of sexy snazzy stuff,
your Warner Brothers Studios, your HBO, you know, your
streaming services, you know, modern, the, the way people
consume television and content these days, right?
Your streamers, you've got all of that stuff.
So that's Warner Brothers Studios, HBO Max and so on.
But then you've got all the legacy stuff, the cable networks
(14:13):
you mentioned, CNN, TNTTBS, Discovery, Food Network, right?
This is all the old stuff. And the idea was that they were
going to split the two and then look for potential buyers,
right? And the strategy was to finish
that kind of split at some pointnext year.
(14:34):
But whilst that's going along and they're trying to execute on
that strategy, you then have potential suitors coming and
sniffing about. And so actually this started
back in September. So before Warner Brothers
Discovery officially put themselves up for sale, they
only put themselves up for sale last month.
Before that in September. What triggered all of this was
(14:56):
actually Paramount coming along and submitting an unsolicited
bid for the entire combined business.
So pre split up in 2026, Paramount saying we'll, we'll,
we'll just come in and Hoover the whole lot up now.
So they bid $19.00 per share unsolicited bid back in in
(15:16):
September. Ultimately the board didn't
accept it. They said like this is this is
this doesn't value us appropriately.
We're going to crack on with ourwith our original plan and we're
going to kind of split this business next year.
Then Paramount came back with animproved terms.
They moved from 19 dollars firstbid to 22 bucks again still for
(15:41):
the whole business, right. And look the logic here for
Paramount, they want to scale incontent, you know, marketing and
technology. Obviously cost synergies are
always ever present in these kind of big mega deals, but
again, the Warner directors chose to, well, chose to not
engage. I mean, they're, they're just,
(16:02):
yeah, not only are they rejecting these, they're not
even prepared to talk to Paramount about this and kind of
dismissing it out of hand. So then we moved to mid-october
and Paramount go bid #3 raise the bar again to 23 1/2 dollars.
And not only was it more, more kind of higher valuation, there
(16:25):
was a much bigger cash element to the, to the make up of this
deal. And actually they pushed it to
80% cash. So obviously as a seller, you
know, you can either receive cash or it might be stock,
right? So shares in the buying firm.
But of course, you know, from a shareholder's point of view, you
know, the, the larger the cash element of the deal, the better
(16:48):
in most scenarios. And so, you know, increasing the
cash elements always more attractive.
However, obviously for Paramount's point of view,
they've got to stump up more cash.
So there's, there's kind of a more complex kind of financing
situation that's that's then required.
They also not only did they up the proportion of cash, they
(17:09):
also increased what's called thereverse termination fee.
So that's if the, if the potential buyer pulls out at any
point during the deal, because obviously, you know, these
deals, it's not like just buyingsomething off the shelf, right?
There's a lot of what's called due diligence involved in these
deal processes where the buyer is, is really deep diving into
(17:31):
every element of the business that they're buying to check
that, you know, what they're buying is what they thought they
were buying. And there's no kind of skeletons
in the closet as it were. So there is risk.
And so they increased their reverse termination fee to $2.1
billion. You know, we're not messing
about with the amount of money here.
So anyway, you know, also they said actually David Zaslav would
(17:57):
also stay on as Co chief executive.
So it's like multiple kind of improvements to the bid there
for their third attempt mid-october and the Warner
Brothers discovery board. No thanks.
So look, they're playing a pretty, yeah, pretty punchy game
(18:18):
here, these Warner Brother Discovery lot by, you know,
continually rejecting these everimproving terms.
But of course, what's happening at the same time is this very
much puts Warner Brother, you know, Discovery in play if
you've got a very persistent suitor who's chasing you and you
(18:38):
keep rejecting them. But obviously this just brings
you into the spotlight. And so in the end, they've
decided to play hardball and it's it's pretty aggressive.
But in the end they said, you know what, let's just put
ourselves up for sale officially.
And yes, Paramount, we know we've got one very interested
party at the table. Let's try and get some more at
(19:01):
the table. And ultimately, let's try and
create what we call competitive tension.
And look, it's a supply and demand thing, right?
As my, as my dad always used to say to explain this concept to
me, you know, if you, if you take your pig to market, if
(19:21):
there's a lot of farmers who want to buy your pig, pigs are
expensive. If you take lots of pigs to
market and there are no farmers buying pigs are cheap.
So it's like it's. Just the the Welsh countryside
school system going on here. Yes, indeed.
So look, let's try and bring multiple farmers to the table.
(19:43):
We've got one pig here, you know, it's the business, it's
Warner Brothers Discovery. And let's try and bring multiple
interested parties, create some competitive tension, create a
bidding war, and ultimately, let's get this price.
Obviously, as the seller, let's get this price as high as we
possibly can. And we'll execute a deal.
(20:04):
So I'm assuming that there's there's a reason why they keep
rejecting Paramount. So if Paramount, it sounds like
what you're describing is WarnerBrothers Discovery has lots of
different parts of a business and Paramount want the whole
thing, meaning that they're probably not over overvaluing,
(20:26):
undervaluing. There's probably some
discrepancies behind these different things because like
you said, well, what if the pig be divided into its parts and
there's, there's one of these farmers who goes, I want the
legs. I don't want the body because
I've got a buyer who I'm sellingthe legs on to who just wants
legs so I can make a premium there.
(20:47):
Or I want the back of the pig orthe belly of the pig or whatever
it might be. So isn't, is that what the
problem is here? Is that what a paramount
undervaluing a part of the overall organization And so in
order to almost probably force Paramount up, you could go in,
right, OK, who is some of the gosend the bankers out who are
(21:09):
some other people who could takespecific parts of the business
that could just force their handto increase some of the
component parts of to influence the bigger deal?
Is that what's going on? Basically, yeah.
I mean, I I'm impressed how wellyou've kind of managed to extend
that pig analogy. But I think that based you've
got to get back to the original merger in 2022 and the kind of
(21:31):
strategy rationale behind that. And they are executing their
plan. It'll turn out to be like a four
year plan, right. But the plan was, as I said,
you've got this sexy streaming side of the business and then
you got the old school legacy cable networks side, right.
And the idea was that let's split them up.
(21:53):
And then if you like, the the the sum of the parts is less
valuable than the separate partsonce separated.
And so here's Paramount saying don't separate.
And so, yeah, essentially in theend, don't get the benefits of
(22:13):
increasing value through separation.
We'll just Hoover the whole lot up now.
Now, you know, there is one angle here where executing that
separation is fraught with risk.And it's, you know, that's a
highly complex kind of project that you've got to execute.
So at least for Warner Brothers Discovery at least, the good
(22:34):
thing here is Paramount is saying that we'll, we'll, we'll
basically take that kind of separation project risk off your
hands. So there is a positive in that
sense. They don't have to execute it
themselves now, but yeah, ultimately they want to split
and get greater value for their shareholders by selling the
parts separately. So that's probably the key
(22:56):
reason why they've been batting off Paramount, you know, for the
last few months despite their their kind of third bid being
pretty interesting at 20, you know, 23 1/2 dollars.
And it's interesting that WarnerBrothers Discovery right now are
trading above 23 1/2 dollars as you'd expect because that bid
got rejected and there are othersuitors we'll talk about in a
(23:20):
second. So the markets right now saying
that this thing will get sold, you know, either split and sell
its parts or sell the whole thing to Paramount and it'll get
sold for more than 23 1/2 dollars.
And to put that into context, this share price has ramped.
I mean, it's doubled in value. The the Warner Brothers
(23:40):
Discovery share price was SAT around about 11 bucks before
Paramount started to show their hand.
It's now 24 nearly right. So we're pricing in a big chunk
here. Now you to put that into even
more context though, ultimately post the merger with Discovery,
(24:01):
their share price popped to $27.00 back in 20/22/27 and it's
actually really underperformed since then and it's gone from 27
to 11. Well, actually got it went below
it almost got down to like, well, 6-6 bucks in 2024, right.
So it's had a shocker from a share price point perspective,
(24:23):
performance perspective. But now these bids are coming
in. Yeah, just looking at this, the
last few months, it's doubled invalue.
So it's an interesting one. All right, well, look, there's
some other big names at the table, so yes, they're up.
I'd like to know. So from the Paramount's
perspective, they're the only bidder going for the whole the
(24:44):
whole thing. Yeah.
Gains instant scale film TV. So if you think about those
franchises, Harry Potter, DC, Game of Thrones, all these sorts
of things, one of Hollywood's biggest TV kind of producers.
If you like the other side, combining HBO Max with Paramount
Plus you mentioned there createsthe much stronger streaming
(25:08):
bundle and spreads content and tech costs over a much larger
base. And then a merge studio group
would control roughly 1/3 of North America's box office,
giving more pricing and marketing power in theatres.
So that's the Paramount story. What about the others then that
have come into the mix? So the other two, so remember
(25:31):
they officially put themselves up for sale, OK to try and
attract in more farmers. Well, the other two farmers, you
might have heard of Comcast and Netflix.
So these aren't, you know, thesearen't, I mean, it's obviously a
massive deal. You know when we're talking
about 23 1/2 bucks or higher pershare, we're talking $60 billion
(25:52):
of evaluation here, right? I thought Netflix doesn't
normally come to the the market in the in the village.
I thought normally they rear their own pigs.
Well, this is indeed true. Because Netflix.
Yeah, Interestingly, yeah. So that they're there rather
than a buy and build as in an M and a sort of strategy, though
(26:13):
they've been organic. Let's let's create content
ourselves, right? And they've spent ridiculous
amounts of money on that over the years, but have now very
successfully positioned themselves as the kind of king,
king streamer. And, and yeah, so sorry,
actually the, the biggest deal they've ever done was only $680
million. So obviously to now step in and
(26:37):
do a 60 billion, I don't know. But of course Netflix aren't
interested in the 60 billion, I should say.
And I don't know what the valuations are of the component
parts once split, but I would assume obviously the streaming
part I would assume would be a lot more valuable.
I don't know what proportion of that overall 60 billion
(26:58):
valuation that part would get, but it's going to be 10s of
billions of dollars, obviously. So it's interesting here that
Netflix are willing to get the checkbook out in a way that they
have never, ever, ever done so before.
I wonder whether a lot of this is a defensive play where it's
just that they just don't want anybody else to get their grubby
(27:20):
mitts on these, you know, these nice assets.
And so, you know, it's just kindof buying using their cash and
their cheque because look, they've got money, right?
They've got their, their cash flows are, are ridiculous.
So they can, they can do this deal.
But I wonder from a, it just seems out of sorts for them from
a kind of strategic kind of growth point of view.
(27:40):
And so I wonder whether now they've become the giant that
they are, they're kind of almostinto a new, new chapter of their
strategy in a way. And it's now it's, it's a
defensive play more than anything to buy this and no one
else gets it. And then Comcast, what, what's
some of the specifics on them? Yeah, I mean, so they're
interested in the Warner Brothers Studios, HBO and
(28:02):
streaming. They're they're also like
Netflix, I should say. Neither of them are interested
in the cable networks kind of legacy stuff.
So and you know, they want to bolt it onto their Universal and
something called their Peacock. I don't I haven't heard of
Peacock, but you know, that's onthe kind of streaming side.
So it also deepens its film and TV library.
(28:25):
So you know, adding that premiumHBO originals, strengthening
both its licensing business and its direct to consumer offering.
It further consolidated traditional Hollywood by
basically putting up another major studio under the NBC
Universal umbrella. So cost synergies, revenue
(28:45):
synergies in the mix there, but also then sees the precedent in
the Disney Fox deal as evidence that regulators might still
clear a big studio combination if structured carefully.
Because obviously like all thesemonster deals, the, the, there's
always regulatory risk. And so, and, and there are
regulatory factors with any one of these three buyers, you know,
(29:09):
potentially doing a deal here. So Comcast, I don't, I wouldn't
say the regulatory risk is necessarily higher with Comcast
than it is with the other two. But so yeah, 33 interesting
three interested parties. I mean, what what's what's
unusual about this is that yeah,they're coming.
These three are coming. Well, Paramount want the whole
(29:32):
business, whereas Comcast and Netflix almost want to do a post
split deal. So you've got, you know, three
players with three different strategies, competitive tension.
And by the way, I should say they've all submitted their
initial bids. We don't know what those are
because this, you know, they, they haven't, Warner Brothers
(29:54):
Discovery have not revealed that.
But what we do know is the bids weren't high enough.
You've got to assume Paramount bid 23 1/2 dollars at least
because that was their final bidthat got rejected back in
October. So we that's why the share price
is higher than that right now. We don't know how much higher,
but Warner Brothers Discovery has said no, not good enough.
(30:16):
Come back to us with final bids 1st of December.
So this is pushed into next weeknow and then we'll see who wins.
I actually think that the bankers have really done a good
job here. They've earned their fees on the
Warner Brothers Discovery side. You actually think that it's
going to go Paramount the whole way?
(30:38):
Yeah. They've just brought in these
other players to just juice those other parts to get an
extra premium, let's say on the streaming side, for example,
just to lift it a little bit. Obviously comes with a lot of
risk as a strategy because your share price is up 90%.
If Paramount decide to go, do you know what?
(30:59):
It's now too rich and I don't like how this has gone for, but
we all know that, you know, business doesn't quite work like
that. You know, there's no room for
ecos when it comes to potential money making deals here on the
Paramount side. So I actually think this is all
just a strategic hand of really well executed strategy on the
(31:22):
side of the advisors who've justbrought in some of these big
names. Like you said with Netflix, I
just think that Netflix given what you described is just not a
big acquirer. They're going to, they're going
to be so price sensitive as a bidder.
Paramount have already just gonelike 19, 2020, 223 1/2.
(31:49):
We'll throw in the cash component.
We'll give this, we'll have someblack board representatives like
they aren't, they are obviously willing to go well and above the
others. Yeah.
It will be interesting because you've got some serious, serious
content for sale on the table here.
Harry Potter, you know that all the DC stuff, you've got Game of
(32:15):
Thrones, you know, this is this is proper content that you know,
it stands the test of time, right?
It's not like you're going to watch Harry Potter once and
never watch it again. You're coming back and back and
back and back. So from a kind of subscription
getting sticky subscribers, you know, that kind of content is
seriously valuable. So you know, it'd be interesting
(32:38):
with with Netflix and just how you know, how are they properly
changing their strategy here? Are they into a new chapter with
regards to their business or not?
But then like final point for meis like ultimately for Warner
Brothers Discovery, ultimately they have a plan.
All right, They had a plan before all this happened.
(33:00):
It's let's split the business and sell the component parts to
get maximized value. Now if Paramount can basically
take them out of that process bybasically giving them the post
split value without them having to execute the split, well I
mean obviously that's the best option.
(33:20):
It's just can Paramount get the price high enough for for them
to accept that path? And also, if we, you know, for
whatever reason have cold feet, find something we don't like,
you get 2.1 billion for your foryour time as that reverse
termination fee. Exactly.
(33:42):
Better than, you know, kick in the nuts.
But all right, well, look, hope,I hope Pierce's pig farm analogy
is something new to your M&A strategy playbook.
You can roll that out at your next interview that you have.
Oh, I'd love it. Come back and tell me how it
(34:03):
goes if you do. All right, so yeah, as per
usual, let us know if there's any questions, any other deals
that you think are worth highlighting in the next
episode, Just drop us a comment.If you're not already following
the channel, please do hit subscribe if you watch your
YouTube or follow and subscribe on Spotify and Apple podcast.
(34:24):
But have a great week ahead. Thanks, Piers.
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