Inside the Biggest M&A Deals You Need to Know (Warner Bros, GE Healthcare, Anglo American & KKR)

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 headlines from a macro perspective, a couple of deal headlines, and then do a bit of a deep dive into Warner Brothers and their evolving bidding saga and a kind of sell-side strategy perhaps because there's multiple bidders at the table here, all with very different needs and desires. So Firstly, on the kind of macro market 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 when we're recording this on Friday the 28th is at 85% now. A lot of Fed speakers coming out. So what was looking a little bit more not so sure has become close 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, uh, on an individual stock side was Nvidia. There was a day where you had a pretty much mirror, uh, opposite effect with Nvidia dropping nearly 3% and Google, uh, rose almost 3% in one day. And Google really top performer, uh, last week, up around 10% in just a 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 centers, signaling a potential challenge, obviously, to NVIDIA's dominance, which we've talked about a lot in recent episodes. Uh, it comes after Google secured a deal to supply 1 million TPUs by Anthropic. Um, TPUs, Piers.

Yep. Google's version of the GPU, basically.

Right. So these are, these are custom designed chips developed by Google, uh, for accelerating machine learning tasks. So yeah. Yeah. I mean, as, as that grows, as they grow in their dominance and, uh, the cloud that they also operate, that whole sphere makes a lot of sense.

I'd just say they've been developing those TPUs for like a decade. You know, this is where Google just quietly behind the scenes, you know, are actually well-established. I think they're on version 7 or 8 even of the TPU. So very well-established technology. So look, they've grabbed a bit of, potentially put the cat amongst the pigeons with regards to NVIDIA's dominance. But then also at the same time, they dropped a new version of Gemini, which has turned out to be very impressive and possibly better than its rivals. So now it's also, yeah, threatening ChatGPT and OpenAI, let's say, for market share on that side as well. So yeah, pretty good week for the Googlers.

Yeah, I'm a longtime Googler. So amen, 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 volatility in '09. So firms like Goldman, JP Morgan, they're expected to generate $165 billion $1 trillion 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. I mean, yeah, yeah. I mean, 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. Can you believe the S&P 500 touched 5,000, um, a few days after. Well, yeah, only just, just went below, right below 5,000. And we're trading, you know, well, knocking on the door of— well, I'll just say 7,000 isn't beyond sort of out of reach for year-end. We're trading 6,822 right now. Um, but yeah, even just a little bit of a bounce of volatility. 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 after this, right? And so, but now, but now those rate expectations have gone back up. So 85% locked in for a cut. So the S&P's nicely rebounded. It hasn't got back to the highs, but it's not far off.

And then finally, on the macro side, the UK budget, I don't think there's any two great shakes there from a market reaction, uh, perspective. Key measures: state pension increase, income tax threshold freezes, new taxes on your EV.

I'm afraid, yes. Not happy.

It's a double hit for you, isn't it? New taxes on electric vehicles and cuts to venture capital trusts, VCT tax relief. I mean, I know you're such a big VC player.

Uh, yeah, not happy. Well, the interesting thing, do you see Jamie Dimon So straight after the budget announced that JP Morgan will be building a mega new kind of building in Canary Wharf to make it their, uh, EMEA HQ. It's actually interesting because JP Morgan were eyeing up a 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 2007, 2008. Then the crisis happened. So they put a freeze on that development, and instead of 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 Dimon has said, because of the budget and Rachel Reeves and a steady hand on the rudder, because of that, we are now confident in the long-term stability, blah, blah, blah, of the UK. We're going ahead. We're pressing the button and we're doing our mega build in Canary Wharf.

Wow.

So there'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 Labour Party, really backing them after what was quite a tricky balancing of budget. Yeah. That's interesting.

Um, 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. Yeah.

Quick stat check. It's going to be 3 million square feet, that building. So it's going to be more than double the floor space of Britain's current tallest building, the Shard.

Wow, it's just crazy talk. I mean, I walked past their new building in Manhattan, Midtown Manhattan, a few weeks ago when I was in New York. That is amazing. That's an amazing building. So that, 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, um, well indeed.

All right, well, look, quick Quick run through some headlines on some deals before the deep dive section. So AxoNobel and Axalta, which was one we covered just a week or so ago, they agreed to that all-stock merger of equals that would create a $25 billion global paint and coatings giant. The latest there is that within a couple of days of that going out, two Axalta shareholders, Artesian Partners and Shapiro Capital, they represent about circa 1.7% of Exalta— publicly attacked the deal, essentially signaling their vote no unless terms are improved or alternatives explored. Another one, GE Healthcare Technologies acquiring medical imaging software provider Intelerad for $2.3 billion, a deal aimed at extending GE's imaging footprint beyond hospitals into outpatient and I'm going to use the American ambulatory settings, accelerating its shift toward SaaS, higher recurring revenue model. Um, and then Veolia Environment acquiring US hazardous waste. So M&A, you know, it's not always, uh, 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 Clean Earth. From, uh, Enviri for about $3 billion in cash, a move that will double Veolia's US hazardous waste footprint and make it the number 2 player in that market. So significant one for that specific space. And then final 2, KKR-led consortium has sold the 700-plus room Hyatt Regency in Tokyo in the Shinjuku to an identified as an unidentified buyer. For over $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 2 years ago.

Right, good trade.

So strong demand, prime Japanese hospitality assets, KKR's ongoing portfolio rotation in Japan. And then the last one Again, I previously covered major deal, Anglo American's 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 Minister Melanie Joly said that the company's current commitments are not enough to meet Canada's revised industrial strategy. So Yeah, still one 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 he's wondering if we cover an M&A deal in the renewable energy, like on wind, for example. So very quickly, Denmark's Ørsted is selling a 50% stake in its Hornsea 3 offshore wind farm in the UK to Apollo. For about 39 billion Danish kroner. That's about just over $6 billion. Uh, that's a deal widely seen as crucial to avoiding a crippling credit rating, uh, 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. Right. So that's a big commitment there, or a move of intent. Hornsea 3, what is that? It's a 2.9 gigawatt offshore wind project in the North Sea that's expected to become the world's largest offshore wind farm when it comes online in 2027. For context, generating enough power for more than 3 million UK homes. So when I saw that, I was kind of like, yeah, that's a lot. And then I saw the context of the 3 million homes. I was like, it's not that much, actually.

No, it's a lot of money for just 3 million homes.

Yeah, but there again, I don't— I mean, I'm not a wind specialist. I'm sure— I don't know what happens after that.

The one interesting thing here, like Apollo, you know, there's been 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 big investment to get that thing fully built. But then, you know, the idea is it kind of throws off very consistent income, which is attractive for their kind of portfolio mix. Cool.

All right. Well, Warner Brothers Discovery, uh, the parent of HBO. and CNN might be more familiar to many, the news last week that they had asked 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 have we arrived at this point? What, why are Warner Brothers Discovery looking to offload a few different assets here? Who are the parties involved who could be interested in taking what?

Yeah, it's an interesting one because there's a backstory. Because you say Warner Brothers, but of course it's not. It's Warner Brothers Discovery. And there was a mega merger back in 2022 where Warner Brothers and Discovery, separate businesses, merged together. And actually, one of the points and one of the rationale strategies for that merger back then was to was to actually merge the two and then kind of split the combined entity into then two separate businesses. Because here what you've got is, you know, you've got all your kind of sexy snazzy stuff, your Warner Brothers Studios, your HBO, you know, your streaming services, you know, modern— 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 the cable networks. You mentioned CNN, TNT, TBS, 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 point next year. 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 Bros. 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 actually Paramount coming along and submitting an unsolicited bid for the entire combined business. So split up in 2026, Paramount saying, ah, we'll just come in and hoover the whole lot up now. So they bid $19 per share, unsolicited bid back in September. Ultimately the board didn't accept it. They said, look, this doesn't value us appropriately. We're going to crack on with our original plan and we're going to split this business next year. Then Paramount came back with improved terms, They moved from $19 first bid to $22. Again, still for the whole business, right? Um, and look, the logic here for Paramount, they want to scale in content, you know, marketing and technology. Obviously cost synergies, um, are always, uh, 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, 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 number 3, uh, raised the bar again to $23.5. And not only was it more, more of kind of higher valuation, there was a much bigger cash element to the, to the makeup 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 larger the cash element of the deal, the better in most scenarios. And so, you know, increasing the cash element's always more attractive. However, obviously from Paramount's point of view, they've got to stump up more cash. So there's kind of a more complex kind of financing situation that's then required. They also— not only did they up the proportion of cash, they also increased what's called the reverse termination fee. So that's if the potential buyer pulls out at any point during the deal, because obviously, you know, these deals, it's not like just buying something off the shelf, right? There's a lot of what's called due diligence involved in these deal processes where the buyer is really deep diving into every element of the business that they're buying to check that 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, uh, Zaslav would also stay on as co-chief executive. Um, so it's like multiple kind of improvements to the bid there for their third attempt mid-October, and the Warner Bros. Discovery board, no thanks. So look, they're playing a pretty, you know, pretty punchy game here, these Warner Bros. Discovery lot, by, you know, continually rejecting these ever-improving terms. But of course, what's happening at the same time is this very much puts Warner Bros. You know, discovery in play, if you've got a very persistent suitor who's chasing you, and you 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 pretty aggressive, but in the end they've 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 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 dad always used to say to explain this concept to me, if you take your pig to market, if 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, so is this the, the Welsh countryside school system going on here?

Yes, indeed. So look, let's try and bring multiple farmers to the table. 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.

So I'm assuming that there's, there's a reason why, uh, they keep rejecting Paramount. So if Paramount— it sounds like what you're describing is Warner Bros. Discovery has lots of different parts of a business, and Paramount want the whole thing, meaning that they're probably not, um, Overvaluing, undervaluing, there's probably some discrepancies behind these different things.

Yeah.

Because like you said, well, what if the pig could 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 selling the legs on to who just wants legs. So I can make a premium there. Or I want the back of the pig or the belly of the pig or whatever it might be. Yeah. So isn't— is that what the problem is here? Is that, what, Paramount undervaluing a part of the overall organization? And so in order to almost probably force Paramount up, you could go, right, okay, who is some of the— go send the bankers out. Who are some other people who could take specific parts of the business that could just force their hand to 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 well you've kind of managed to extend that pig analogy. But, um, I think that basically you've got to go back to the original merger in 2022 and the kind of strategy rationale behind that. And they are executing their plan. It'll turn out to be like a 4-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. And then, if you like, the sum of the parts is less valuable than the separate parts once separated. And so here's Paramount saying, don't separate. And so, yeah, essentially, in the end, don't get the benefits of increasing value through separation, we'll just hoover the whole lot up now. Now, there is one angle here where executing that separation is fraught with risk, and that's a highly complex project that you've got to execute. So at least for Warner Bros. Discovery, at least the good thing here is Paramount is saying, look, we'll basically take that that 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 reason why they've been batting off Paramount for the last few months, despite their third bid being pretty interesting at $23.50. And it's interesting that Warner Discovery right now are trading above $23.50, as you'd expect, because that bid got rejected. And there are other suitors we'll talk about in a second. So the market's right now saying that this thing will get sold, either split and sell its parts or sell the whole thing to Paramount, and it'll get sold for more than $23.50. And to put that into context, this share price has ramped. I mean, it's doubled in value. The Warner Bros. Discovery share price was sat around about $11 before Paramount started to show their hand. It's now $24 nearly, right? So we are pricing in a big chunk here. Now, you, to put that into even more context though, ultimately post the merger with Discovery, their share price popped to $27 back in 2022. $27, and it's actually really underperformed since then. And it's gone from $27 to— well, actually went below— it almost got down to like, well, $6, $6 in 2024, right? So it's had a shocker from a share price point perspective, performance perspective. But now these bids are coming in. Yeah, just looking at this, the last few months it's doubled in value. So it's an interesting one.

All right, well, look, there's some other big names at the table, so—

yes, there are.

I'd like to know, so from the Paramount's perspective, they're the only bidder going for the whole, the 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— um, one of Hollywood's biggest TV kind of producers, if you like. On the other side, combining HBO Max with Paramount Plus—

mm-hmm—

you mentioned there creates the much stronger streaming bundle and spreads content and tech costs over a much larger base. And then a merged studio group would control roughly a third of North America's box office, giving more pricing and marketing power in theaters. So that's the Paramount story. What about the others then that have come into the mix?

So the other two— so remember, they officially put themselves up for sale, okay, to try and attract in more farmers. Well, the other two farmers you might have heard of, uh, Comcast and Netflix. Uh, so these are, you know, these aren't— I mean, it's obviously a massive deal, you know, when we're talking about $23.50 or higher per share, we're talking $60 billion. Of valuation here, right?

I thought Netflix doesn't normally come to the market 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&A sort of strategy, though they've been organic. Let's create content ourselves, right? And they've spent spent ridiculous amounts of money on that over the years, but have now very successfully positioned themselves as the kind of king, king streamer. Um, and, and yeah, so sorry, actually the, the biggest deal they've ever done was only $680 million. Um, so obviously to now step in and do a $60 billion, I don't know. But of course Netflix aren't interested in the $60 billion, I should say. And I, 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 valuation that part would get, but it's going to be tens 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 mitts on these nice assets. And so it's just kind of buying, using their cash and their check. Because look, they've got money, right? Their cash flows are ridiculous. So they can do this deal. But I wonder from a— it just seems out of sorts for them from a kind of strategic growth point of view. I wonder whether now they've become the giant that they are, they're almost into a new chapter of their strategy in a way, and it's a defensive play more than anything to buy this so no one else gets it.

And then Comcast, what's some of the specifics on them?

They're interested in the Warner Brothers Studios, HBO, and streaming. They're also, like Netflix I should say, neither of them are interested in the cable networks legacy stuff. Stuff. Um, so yeah, and you know, they want to bolt it onto their Universal and something called their Peacock. Uh, I don't— I haven't heard of Peacock, but, um, you know, that's on the kind of streaming side. So it also deepens its film and TV library. So, you know, adding that premium HBO Originals, strengthening both its licensing business and its direct-to-consumer offering, um, it further consolidates traditional Hollywood by basically putting up another major studio under the NBCUniversal umbrella. Um, so cost synergies, revenue synergies in the mix there. Um, but also then sees precedent in the Disney-Fox deal as evidence that regulators might still clear a big studio combination if structured carefully. Because obviously, like all these monster deals, the, the, there's always regulatory risk.

Risk.

And so, and there are regulatory factors with any one of these three buyers, you know, 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, um, so yeah, three, three interesting, three interested parties. I mean, what's, what's unusual about this is that Yeah, these three are coming. Well, Paramount want the whole business, whereas Comcast and Netflix almost want to do a post-split deal. So you've got 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 Warner Bros. Discovery have not revealed that. But what we do know is the bids weren't high enough. You've got to assume Paramount bid $23.5 at least, because that was their final bid that 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 Bros. Discovery has said no, not good enough, come back to us with final bids 1st of December. So this is pushed into next week now. 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 Bros. Discovery side. Yeah, I actually think that it's going to go Paramount the whole way. 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, you know what, it's now too rich and I don't like how this has gone for, um, but we all know that, you know, business doesn't quite work like that. You know, there's no room for egos when it comes to potential money-making deals here. Um, yeah, Paramount side. So I actually think this is all just a strategic hand of really well-executed strategy on the side of the advisors who've just brought 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. Yeah, they're gonna, they're gonna be so price sensitive as a bidder. Yeah, Paramount have already just gone bup bup bup bup bup. Like 19, 20, 22, 23 and a half. We'll throw in the cash component, we'll give this, we'll have some like board representatives. Like, they are, they are obviously willing to go well above the others.

Um, yeah, it will be interesting because you've got some serious, serious content for sale on the table here. Harry Potter, all the DC stuff, you've got Game of Thrones. This is proper content that 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 subscription, getting sticky subscribers, that kind of content is seriously valuable. So So it'd be interesting with Netflix and just how— are they properly changing their strategy here? Are they into a new chapter with regards to their business or not? But then final point for me is ultimately for Warner Bros. Discovery, ultimately they have a plan. All right? They had a plan before all this happened. It's let's split the business and sell the component parts to get maximize value. Now, if Paramount can basically take them out of that process by basically giving them the post-split value without them having to execute the split, well, I mean, obviously that's the best option. 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 time as a reverse termination fee.

Exactly.

It's better than, you know, a kick in the nuts, but there you go. All right, well, look, I hope Piers'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 goes if you do.

All right, so yeah, as per usual, let us know if there's any, uh, 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're watching on YouTube, or follow and subscribe on Spotify and Apple Podcasts. But have a great weekend. Thanks, Piers.