Breakup Bonanza: Netflix’s $5.8 Billion Warner Penalty Tops M&A History
One of the largest breakup fees ever included in a deal is a $5.8 billion penalty that Netflix has agreed to pay if the deal collapses
Netflix acquired Warner Bros. for $72 billion. One of the largest breakup fees ever included in a deal is a $5.8 billion penalty that Netflix has agreed to pay if the deal collapses or isn’t approved by regulators.
The fee, which is 8% of the deal’s equity value, is much higher than the typical amount even in large transactions, showing Netflix executives’ confidence in their ability to persuade international antitrust authorities.
According to a Houlihan Lokey report, the average breakup fee in 2024 was 2.4 per cent of the total transaction value.
Netflix’s multibillion-dollar commitment highlights the intense competition to take over the famous Hollywood studio.
Earlier this week, rival Paramount Skydance Corp. made a more substantial offer, increasing its proposed breakup fee to $5 billion—more than doubling it. Meanwhile, if Warner Bros. shareholders reject the deal, the company would have to pay a $2.8 billion reverse breakup fee. If Warner Bros. accepts a competing offer, the new buyer would be responsible for that cost.
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