Warner Bros. explores acquiring Xiang Bobo, receives "buy" rating and $28 price target from Redburn.

Redburn Atlantic upgraded Warner Bros. Discovery's rating from "neutral" to "buy" on October 30 (Thursday), with a target price of $28, corresponding to an upside potential of 31.2%. The reason for the upgrade is that multiple companies have recently expressed interest in acquiring its assets, with Paramount's intention being particularly noteworthy. Warner Bros. Discovery announced on October 21 that it is evaluating strategic options, including a potential sale of the company, after receiving several acquisition interests. The company owns Warner Bros. Studios, HBO Max streaming service, and a range of cable TV channels. Paramount has expressed plans to retain Warner Bros. Discovery channels if the merger is successful. According to sources, Paramount's CEO David Ellison hopes to retain the creative teams of both studios and integrate some marketing and distribution businesses. Paramount has made three acquisition offers to Warner Bros. Discovery, all of which were quickly rejected. Ellison initially bid $20 per share, then raised it to $22 to $24 per share. Later reports mentioned a $25 bid from Ellison, but he stated he would not pay a higher price. Warner Bros. Discovery promptly turned down all three offers. Redburn notes that Paramount is still the most likely best buyer for Warner Bros. Discovery, but other potential bidders include Comcast Corporation Class A, Netflix, Amazon.com, Walt Disney Company, and Apple Inc. In terms of revenue synergy, Redburn's analysis shows that Walt Disney Company has the highest potential, at $7 billion, followed by Paramount at $5 billion, Comcast Corporation Class A at $4 billion, Netflix at $3 billion, and Apple Inc. at $1 billion. Amazon.com, Inc.'s revenue synergy is considered limited. In terms of cost synergy, if Paramount acquires all of Warner Bros. Discovery's assets, it is estimated to save about $2 billion; if only the streaming and production studio assets are acquired, the estimated savings would be around $1.3 billion. From a financial standpoint, the deal is feasible for all the potential bidders.