Netflix(NFLX.US) withdraws from bidding war! Under Paramount's billion-dollar push(PSKY.US), Warner Bros. explores(WBD.US), expected to be acquired.

CNBC Finance APP has learned that after Paramount Tandu (PSKY.US) increased its bid to acquire Warner Bros. Discovery (WBD.US), Netflix (NFLX.US) announced it would abandon its bid for Warner Bros. Discovery’s film and TV studios and HBO Max streaming, thus withdrawing from the bidding war. Netflix stated in a Thursday release: “The deal we previously negotiated could have created shareholder value and had a clear path to regulatory approval. However, to match Paramount Tandu’s latest bid, the transaction would no longer be financially attractive, so we declined to follow up.”

Following this news, Netflix’s shares rose over 9% after hours on Thursday, indicating investor approval of the company’s decision to withdraw; Paramount Tandu’s shares rose over 6%.

Earlier this week, Paramount Tandu increased its bid to acquire all of Warner Bros. Discovery’s shares from $30 to $31 per share, in a all-cash deal, surpassing Netflix’s offer of $27.75 per share. Unlike Netflix, Paramount Tandu’s proposal covers all of Warner Bros. Discovery’s businesses, including CNN, TBS, and TNT pay-TV networks. Additionally, Paramount Tandu’s latest bid includes a clause—if the proposed merger fails to gain regulatory approval, the company will pay a $7 billion breakup fee. Paramount Tandu also agreed to bear the $2.8 billion breakup fee that Warner Bros. Discovery would owe if the deal with Netflix does not go through.

Warner Bros. Discovery’s board of directors stated in a Thursday release that Paramount Tandu’s new acquisition plan, totaling $111 billion, is more favorable to shareholders than the earlier agreement with Netflix. Given Paramount Tandu’s superior bid, Netflix had four days to revise its own proposal. However, the streaming giant ultimately chose to withdraw, bringing an end to the months-long bidding war with multiple revised offers.

Warner Bros. Discovery CEO David Zaslav said in a statement: “Netflix is a great company, and throughout the process, Ted, Greg, Spencer, and their teams have been outstanding partners.” He was referring to Netflix Co-CEOs Ted Sarandos, Greg Peters, and CFO Spencer Neumann. He added, “Once the board votes to approve the merger agreement with Paramount Tandu, it will create tremendous value for our shareholders. We are excited about the potential of the combined Warner Bros. Discovery and Paramount Tandu and look forward to telling compelling stories that resonate worldwide.”

Last week, Netflix granted Warner Bros. Discovery a seven-day waiver to re-engage with Paramount Tandu in negotiations, facilitating the higher bid. Sarandos said in an interview last week that the waiver was granted to provide shareholders with clearer information. He stated: “Paramount Tandu has been making a lot of noise, causing confusion among shareholders… including proposing various hypothetical bids and communicating directly with shareholders, bypassing Warner Bros. Discovery’s board. So we offered an opportunity for shareholders to get what they deserve—full clarity and certainty.” However, Sarandos did not specify whether Netflix would raise its own bid to match Paramount Tandu’s revised offer.

Two other Netflix co-CEOs stated in a release: “Warner Bros. Discovery is a world-class organization, and we appreciate David Zaslav, Gunnar Wiedenfels, Bruce Campbell, Brad Singer, and the Warner Bros. Discovery board for conducting a fair and rigorous process.” They added: “We believe we could have been excellent managers of Warner Bros. Discovery’s iconic brands, and our deal would strengthen the entertainment industry and preserve and create more production jobs in the U.S. But this deal has always been an ‘icing on the cake’ option at the right price, not a ‘do whatever it takes’ deal.”