Warner Bros. Urges Investors to Reject Paramount Bid

Summary

Bloomberg Intelligence Podcast Summary

Episode: Warner Bros. Urges Investors to Reject Paramount Bid
Date: December 17, 2025
Hosts: Scarlet Fu and Paul Sweeney

Episode Overview

This episode dives into major business stories affecting various markets, with an initial deep focus on the escalating M&A drama between Warner Bros. Discovery, Paramount, and Netflix. Other segments tackle airline industry consolidation, trends in U.S. homebuilding, and the year’s largest medical IPO. Featuring insights from Bloomberg Intelligence analysts, the discussion is rich in market data, strategy, and competitive analysis.

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1. The Warner Bros., Paramount, and Netflix Deal Saga (03:09–08:22)

Main Theme

• Paramount has updated their bid for Warner Bros. Discovery but held their $30/share offer, instead improving financing commitments via a $41 billion equity backstop from the Ellison family.
• Warner Bros. Discovery’s board urges investors to reject Paramount’s bid, calling it inadequate compared to Netflix’s competing offer.

Key Insights

• The financing backstop increases confidence but does not address valuation concerns.
• Warner Bros. Discovery board remains unsatisfied, citing undervaluation and additional costs that would be incurred if switching from Netflix’s offer.
• Analyst Geetha Ranganathan estimates Paramount would need to raise the bid to at least $32.50–$35/share to be considered seriously.

Notable Quotes

• “The inadequate really stems from the fact that they feel that Paramount Skydance is undervaluing their TV network business pretty substantially.” – Geetha Ranganathan [03:36]
• “You kind of put all of that math together, and we come up with at least a $32.50 increased bid that Paramount would need to present in order to get Warner Brothers Discovery board back to the table.” – Geetha Ranganathan [04:00]

Paramount’s Bid Dynamics

• Netflix is “quietly sitting on the sidelines” but reiterates commitment and confidence in regulatory clearance.
• Warner Bros. Discovery sees similar regulatory impacts between deals but prefers Netflix due to fewer projected job losses.

On Jared Kushner’s Affinity Partners Exiting the Deal

• Affinity Partners has withdrawn its $200 million financing over possible conflicts, which improves optics for the Paramount offer.

Memorable Moment

• “Until they do something on the pricing front, I don't think the Warner Brothers Discovery board is going to want to come back to the table to re-engage.” – Geetha Ranganathan [06:10]

Comparative Valuation

• Discussion of Comcast’s Versant cable network spinoff as a benchmark, which implies Warner Bros. assets may be worth more than Paramount’s offer suggests.

Industry Outlook

• Media M&A activity is expected to remain high, especially after this headline deal resolves.

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2. Airline Consolidation: Spirit and Frontier Merger (11:35–15:31)

Main Theme

• Spirit Airlines is in revived merger talks with Frontier Group to stave off bankruptcy, with market implications discussed by analyst George Ferguson.

Key Insights

• Both airlines have compatible business models; a merger could accelerate growth by combining resources and fleets.
• Regulators are not likely to intervene, as the combined entity would barely surpass JetBlue in size and remain well behind major carriers like Southwest.

Notable Quotes

• “You have to be able to fly coast to coast, offer your customers a full complement of destinations... I don't think it hurts for Frontier to try to get larger.” – George Ferguson [13:02]
• “If Spirit doesn't find someone to go with soon, they may cease to exist. And that obviously hurts jobs.” – George Ferguson [15:15]

Jobs Impact

• Merger could preserve jobs; without a deal, Spirit may not survive, risking greater losses.

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3. U.S. Homebuilder Lennar’s Disappointing Quarter (18:46–24:12)

Main Theme

• Lennar, a major U.S. homebuilder, reported disappointing earnings and gave lackluster guidance, reflecting broader headwinds in the housing sector.

Key Insights

• Despite lower mortgage rates, demand remains tepid due to affordability issues and low consumer confidence.
• Competition from a growing resale market is driving up sales incentives and squeezing margins.
• Existing home sales remain about 20% below normal levels due to a “lock-in” effect from lower-rate mortgages during the pandemic.

Notable Quotes

• “Consumer confidence is really holding the market back. There's concerns over the direction of the economy and concerns about the labor market.” – Drew Redding [19:55]
• “In just three years, they've gone from a gross margin in the high 20% to something in the high teens percent in 2025.” – Drew Redding [23:28]

Company Strategy Pivot

• Lennar aims to focus on sustaining margins due to downward demand, normalizing building activity, and holding off pushing volumes further.

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4. Medline’s $6B+ IPO: Behind the Numbers (27:27–33:21)

Main Theme

• Medline launches the year’s largest IPO, valued north of $6 billion, prompting analysis of its business model and growth outlook.

Key Insights

• Medline is a leader in manufacturing and distributing medical supplies, with half of revenue from its own products (offering higher margins).
• The IPO is mostly to repay $16 billion in debt from the company’s leveraged buyout by private equity.
• The company is seen as a stable, long-term grower, with top institutional support and a commitment to margin improvement.

Notable Quotes

• “Half the company today is their own Medline brand products. Half of it is distribution services. The secret sauce here is... they can essentially give away the distribution and logistics piece while capturing all the margin on the product side.” – Jonathan Palmer [28:21]
• “This is a very stable business... I think this is a story that's going to unfold over multiple years where... they’re going to hit their numbers, they'll pay down debt so their leverage goes down.” – Jonathan Palmer [32:22]

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5. Other Noteworthy Market Insights

Media Consolidation Outlook

• NBC/Comcast may need to pursue acquisitions or partnerships to strengthen their streaming offerings.
• Smaller streaming networks (e.g., AMC) are seen as potential targets as consolidation heats up.

Housing Market Details

• Homebuilders must balance affordability (through incentives) with sustaining profitability amid competition from resales and macro uncertainty.

Healthcare Distribution Competition

• Medline has outpaced peers like Cardinal Health and Owens & Minor by focusing on proprietary product lines.

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6. Key Timestamps for Major Segments

• Warner Bros./Paramount/Netflix Bidding War: 03:09–08:22
• Airline Consolidation (Spirit–Frontier): 11:35–15:31
• Lennar Homebuilder Analysis: 18:46–24:12
• Medline IPO Overview: 27:27–33:21

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Conclusion

This episode offers a comprehensive, data-driven look at today’s business headlines, with analysts unpacking the strategic and financial details guiding some of the year’s biggest deals in media, aviation, housing, and healthcare. The podcast stands out for its emphasis on competitive benchmarking, deal rationale, and implications for investors and the broader market.

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For further details, explore the Bloomberg Intelligence Podcast on your preferred platform or watch the episode live on YouTube.

Transcript

[A]

What is actual investing? We believe that it's a real world task to deliver thoughtful capital deployment. It's not about speculating over the short term.

[B]

It's about understanding the long term opportunities.

[A]

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[D]

Yeah, not, not completely sure, Scarlett. I, I do think that they need to up the price. You know, Warner Brothers Discovery, of course, the main concern that they raised was financing, but they also called the proposal inadequate, inferior to Netflix and illusory. The inadequate really stems from the fact that they feel that Paramount Skydance is undervaluing their TV network business pretty substantially. Plus, they also talk about the extra almost $2 a share that they would need from Paramount if they were to walk away from a Netflix. This is for. This is to cover both the termination fee Warner Brothers Discovery would own would all Netflix, as well as, you know, some of the financing costs. So there's all of that, you know, you kind of put all of that math together and we come up with at least a $32.50 increased bid that Paramount would need to present in order to kind of get the Warner Brothers Discovery board back to the table. So, yes, the financing helps a little bit, but not sure it really changes the conversation.

[E]

We haven't heard a whole lot from Netflix recently. Are they just quietly sitting on the sidelines and confident in their bid?

[D]

So they did, you know, put out a letter to employees, shareholders, just kind of reiterating their commitment to the deal. They think that it will go through. They don't think they will have, you know, huge problems with the regulators. And it was interesting today, even in the Warner Brothers Discovery letter that they put out, suggesting that, you know, they don't see, or rather that they view both of the deals as, as equal from a regulatory perspective. And one of the key numbers that they highlighted, the Warner Brothers Discovery team, was the $9 billion in synergies. So Paramount Skydance basically talking about $3 billion in synergies from its Skydance deal, $6 billion from the, you know, Warner Brothers Discovery deal, saying that that will actually put a lot of, you know, that that's bad for Hollywood.

[E]

Sure.

[D]

It would result in a lot of job losses, whereas the Netflix deal might actually be better. So who knows?

[C]

Who knows? And I mean, this is something that's going to play out over the next year and a half to two years. Geeta, we know that Jared Kushner, the president's son in law, his private equity firm, Affinity Partners, was involved in the Paramount Skydance deal. It was supposed to contribute $200 million to the financing, but it has since pulled out of this bid, perhaps because of potential conflicts of interest. Does this change the scope of Paramount Skydance's offer? Does it make it more attractive, less attractive, or does it not really do much?

[D]

I think, yes, you're right, Scarlet. The optics were definitely bad and it kind of, you know, looked a little bit questionable. So now they're kind of removing that, which is, which is definitely good. I think, I think it's more positive for the Paramount Skydance deal. That said though, I think they really, really need to deliver a knockout bid. And the knockout bid that we're kind of looking for is something like $35. I think that really then gets Netflix thinking about, okay, do we need to re up our offer? And everybody gets excited at the Warner Brothers Discovery board again until they do something on the pricing front, I don't think the Warner Brothers Discovery board is, is going to want to come back to the table to re engage.

[E]

Geetha. One of the comparable deals out there for a spin off of Warner Brothers Cable Networks is what Comcast is spinning out its cable networks into a company called Versant. Is that publicly traded yet? Have they done that spin out?

[D]

Yeah, they did. You know, they have a, when issued trading, the actual, the complete distribution will, will happen sometime in, in January when it will start trading. But we do, you know, they issue trading. We do have some price discovery for that stock. So right now, if you kind of look at where Versant is trading, we get a D or a forward EBITDA multiple of about 5.2 times, which is higher than what Paramount Skydance had suggested for the valuation of the Warner brothers discovery at 4.5x. So already there we're kind of seeing some signs that the valuation of the global networks business should be slightly higher.

[C]

Do you see any other M and A taking place in media? I know we're all fixated on the bidding war for Warner Brothers Discovery, but at one point Comcast was a potential bidder and it dropped out fairly early. But are there any other deals kind of percolating in the background that you would keep your eye on?

[D]

I think there's just a lot of consolidation that's waiting to happen. Scarlet. I think people first want to wait and watch a little bit, see what happens with the Warner Brothers Discovery situation, kind of test out what's happening. With the regular regulators. But yeah, there are absolutely a lot of smaller players. And you know, Netflix becoming bigger or Paramount becoming bigger really kind of forces everybody to take a hard look at their portfolios and see what they should do next. As you rightly mentioned, NBC is the one name that definitely comes up to mind. Comcast, NBC. They need something, their peacock platform is really subscale. So it's, it's really going to depend on whether they want to do some kind of partnership or they actually need to go out and acquire some other smaller networks, maybe AMC networks, maybe some other kind of, you know, streaming business. So a lot of deals waiting to happen, but I think this is really the big one that everybody's focused on at the moment.

[E]

Stay with us. More from Bloomberg Intelligence coming up after this.

[A]

What is actual investing? We believe that it's a real world task to deliver thoughtful capital deployment. It's not about speculating over the short term.

[B]

It's about understanding the long term opportunities.

[A]

For companies through technological progress or new business models. So we seek out those exploring big new ideas that will change the world. Then we back them to give those ideas time to flourish. Baillie Gifford Actual Investors Find out [e-mail] these days it seems like AI agents are just about everywhere. You turn every field and every function. But without identity, you can't trust they'll serve your business instead of jeopardizing it. Fortunately, Okta helps you get identity right by securing your AI agents identities, giving you a single layer of control, a single standard of trust. So whether an AI agent supports a single user or you're in entire enterprise, with Okta you'll turn risk into opportunity. Secure every agent, secure any agent. Okta secures AI support for the show.

[E]

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[C]

You'Re listening to the Bloomberg Intelligence Podcast. Catch us live weekdays at 10am Eastern on Apple CarPlay and Android Auto with the Bloomberg Business app. Listen on demand wherever you get your podcasts or watch us live on YouTube.

[E]

Let's switch gears to the airline business bankruptcy. Spirit Aviation holdings, remember them, is in revived discussions to merge with Frontier Group holdings in a deal that could rescue the deep discount airline from insolvency. Let's break this potential deal down with George Ferguson, Senior aerospace, defense and airlines Analyst for Bloomberg Intelligence. George, does it make sense putting these two, I'm going to call them struggling regional airlines or discount airlines. Does it make sense to put them together?

[B]

You know what, I think it might actually. So this is, you know, back to the future originally sort of. I think, you know, what we saw sort of set off a little fight for Spirit Airlines was the initial merger purchase from Frontier. Frontier taking spirit, JetBlue decided they didn't want to let those two, you know, coalesce, merged together and become a major competitor to them. So they stepped in the middle, tried to grab Spirit and after that everyone, Spirit, Frontier, JetBlue just went through some pretty rough times as fares weakened in the market. I think, you know, the economy flyer kind of faded out a little bit on higher inflation and other problems. And so, you know, I think where we're back to though is that Spirit and Frontier had very similar business types, similar cultures. I think if you put the two airplane airlines together now, you'd have an airline that have something like 350 seats. I think there's enough other markets they could go after. I mean, in comparison, you know, Southwest, which is a domestic and sort of near to the U.S. kind of market airline.

[D]

Mm.

[B]

They have 700 airplanes. They find a place to put all those airplanes. So I think the. It could sort of charge growth up pretty quickly for Frontier, sort of help them lay in an extra hundred airplanes. Might not be a bad idea, and they might get a really nice price on it.

[C]

But do two weak airlines make a strong airline?

[B]

I mean, look, right now, I think the. The economy portion of the business is reeling. It has too much capacity. Spirit is shedding. Some of those airplanes are going to go elsewhere. So we're talking about an airline that only has 100. And I think if you want to be competitive in the market, you have to be able to fly sort of coast to coast, offer your customers a full complement of destinations. I think you need more heft for those loyalty programs that help drive some better results as you sell them credit cards and they buy their groceries and things like that on it. So I don't think it hurts for Frontier to try to get larger and to do it, to supercharge it through. Taking 100 airplanes out of Spirit. I don't think it's a. I don't think it's a bad idea.

[E]

Will the regulators allow this? George?

[B]

I don't think it's going to be a problem. Right. I don't think it was originally a problem when JetBlue was looking at Spirit and when Frontier was looking at Spirit. But now Spirit's even smaller. We kind of put them together today, looking at available seat miles in one queue. A combined airline looked to us to be the sixth largest in the country. It was just ahead of JetBlue. If it adds, I don't know if it adds, you know, some premium seating and knock some seating out of some of those airplanes, it might not even beat JetBlue. I don't think this is a big issue for the US Market.

[C]

What would this mean for jobs? Jobs at Spirit, jobs at Frontier?

[B]

I mean, I think it could probably preserve some jobs because I don't think they're going to want to shrink the airline operations. But I do think if Spirit doesn't find someone to go with soon, they may cease to exist. And that obviously hurts jobs.

[E]

Stay with us. More from Bloomberg Intelligence coming up after this.

[A]

These days, it seems like AI agents are just about everywhere you turn, every field and every function. But without identity, you can't trust those. Serve your business instead of jeopardizing it. Fortunately, Okta helps you get identity right by securing your AI agents identities, giving you a single layer of control, a single standard of trust. So whether an AI agent supports a single user or your entire enterprise. With Okta you'll turn risk into opportunity. Secure every agent, secure any agent. Okta secures AI support for the show.

[E]

Comes from public on public. You can build a multi asset portfolio of stocks, bonds, options, crypto and now generated assets which allow you to turn any idea into an investable index. With AI it all starts with your prompt. From renewable energy companies with high free cash flow to semiconductor suppliers growing revenue over 20% year over year, you can literally type any prompt and put the AI to work. It screens thousands of stocks, builds a one of a kind index and lets you back test it against the S&P 500. Then you can invest in a few clicks. Generated assets are completely customizable and based on your thesis, not someone else's. Go to public.com market and earn an uncapped 1% bonus when you transfer your portfolio. That's public.com market paid for by Public.

[A]

Investing Brokerage Services by Open to the Public Investing Inc.

[E]

Member FINRA and SIPC Advisory Services by Public Advisors llc. SEC Registered Advisor Generated Assets is an interactive analysis tool. Output is for informational purposes only and is not an investment recommendation or advice. Complete disclosures available at public.com disclosures with.

[A]

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[E]

Scarlet and Paul Sweeney live here in our Bloomberg Interactive Broker studio in New York City. Streaming live on YouTube as well. Well, homebuilder Lenore reported some earnings from today. A little bit disappointing here. The stock down 5% today, down 18% year to date. This is a big company. It's got a market cap of like $28 billion. But I'm looking at some of the homebuilders. A lot of them are down double digits on a year to date basis here. Let's break it down with Drew Redding, Hope building analyst for Bloomberg Intelligence. Drew, talk to us about Lennar. What did they say to the street here with their latest earnings?

[F]

Yeah, this was a tough print for Lennar this quarter. They came into the quarter with a pretty low bar. Investor expectations had been coming down, but they still disappointed on both orders and margins. And even more concerning was the guidance they issued for the first quarter, which was short on orders, closings and margins. So we think that consensus needs to come down pretty sharply here. You know, what this tells us is that even though rates have fallen to kind of that low 6% range, I think we're about 6.3 now, it doesn't appear that they're significantly catalyzing demand, which was what a lot of people had been expecting. So I think that points out that there's other things going on. We've said in the past it's not just rates, but it's prices and overall affordability. But something we've heard pretty consistently from the builders is that consumer confidence is really holding the market back. There's concerns over the direction of the economy and concerns about the labor market. Look, if you don't have a job, you're certainly not buying a house. So we expect in this environment the use of sales incentives to remain elevated. And that's going to continue to pressure margins.

[C]

Yeah, I mean, they get volume, but they don't get the profitability. So homebuilders are facing a lot of challenges. They also face competition from the resale market. Talk a little bit about the numbers involved here in terms of new construction versus existing homes.

[F]

Yeah, that's a, that's a great point. You know, the lack of for sale inventory in the resale market was a huge benefit to the builders over the last couple of years. There weren't a lot of options, so it funneled buyers into the new home market where, you know, builders have been able to make monthly payments more attractive for their use of buy downs. That dynamic has shifted over the last year where we're starting to see pretty significant increases in for sale listings in the resale market, particularly in the most important markets for the builders. You know, think Florida, Texas, California. So all of a sudden there's this new competition for them and in order to get a sale, they're having to fight farther, harder for each one, which means higher incentives, more pressure on pricing.

[E]

Drew, I'm looking at the existing home sales in the United States. We've been running at about a 4 million home rate for the last few years. But historically that's been a lot higher, hasn't it? So there just, there's just not a lot of supply of existing homes out there in the marketplace. And is that an interest rate story?

[F]

Yeah, it's partly an interest rate story. You know, the one thing that we've consistently pointed out is that if you look at the composition of outstanding mortgages, you have a majority of current mortgage holders who have something well below the prevailing mortgage rate, which is around 6%. Now, a lot of people during the pandemic were able to lock in rates in the fours and even the high threes, some perhaps in the twos. So the existing home market has really been frozen. If you look at total volumes you mentioned, we've been hovering around this 4 million annualized rate for about three years now. That's about 20% below what a normalized market would look like. So I think rates coming in will certainly help as we look out to next year. We do think that you're going to see perhaps mid to high single digit growth in the existing home market. But keep in mind, we're coming off, you know, historically low levels, so some improvement. But I think context is certainly key there.

[C]

Lennar, certainly not the only builder facing these, these challenges. How is the company specifically saying or explaining to investors how it's adapting to this new normal of persistent affordability concerns due to softening consumer confidence and a weakening job market? All these macro headwinds that it has no control over.

[F]

Yeah, Lenore has been a pretty interesting example. Remember, they're the second largest builder by volume in the country and they run a production first business, which means their, their goal is to push volumes. And over the last couple of years they've been willing to sacrifice margin to get volume. So you know, they'll tell you they're bringing a more affordable product to the market.

[D]

It.

[F]

But what we've seen is a dramatic drop in their gross margins in just three years. They've gone from a gross margin in the high 20% to something in the high teens percent in 2025. So a very sharp fall. And what they told us last quarter is that they can only push so hard on this market. The demand just simply isn't there. So in order to get more sales, the incentives have to keep ratcheting up. So what they told us is that they're making some sort of a pivot into where they're looking to sustain their gross margin. So what we want to hear from them on the call is, you know, where do we think that gross margin floor ultimately lands and is the pullback in production that we've started to see is it has it normalized?

[E]

Stay with us. More from Bloomberg Intelligence coming up after this.

[A]

These days it seems like AI agents are just about everywhere you turn every field and every function. But without identity, you can't trust they'll serve your business instead of jeopardizing it. Fortunately, Okta helps you get identity right by securing your AI agents identities, giving you a single layer of control, a single standard of trust. So whether an AI agent supports a single user or your entire enterprise, with Okta you'll turn risk into opportunity. Secure every agent, secure any agent Okta.

[E]

Secures AI support for the show comes from public. On public you can build a multi asset portfolio of stocks, bonds, options, crypto and now generated assets which allow you to turn any idea into an investable index. With AI it all starts with your prompt. From renewable energy companies with high free cash flow to semiconductor suppliers growing revenue over 20% year over year, you can literally type any prompt and put the AI to work. It screens thousands of stocks, builds a one of a kind index and lets you back test it against the S&P 500. Then you can invest in a few clicks. Generated assets are completely customizable and based on your thesis, not someone else's. Go to public.com market and earn an uncapped 1% bonus when you transfer your portfolio. That's public.com market paid for by Public.

[A]

Investing Brokerage Services by Open to the Public Investing Inc.

[E]

Member FINRA and SIPC Advisory Services by Public Advisors, llc SEC Registered Registered Advisor Generated Assets is an interactive analysis tool. Output is for informational purposes only and is not an investment recommendation or advice. Complete disclosures available at public.com disclosures with.

[A]

The B2B card payment landscape evolving, large corporations face pressure as buyers increasingly demand to pay invoices by virtual card. For merchant acquiring businesses like yours, this is a high growth opportunity waiting to be unlocked with Mastercard's adaptive approach to B2B acceptance. You can enhance your infrastructure for high value payments and meet your customers unique needs. MasterCard offers solutions and support for every step of the supplier life cycle, helping you deepen merchant relationships, start fast, grow strategically and scale at your pace. With a modular toolkit you can flexibly deploy. Discover [e-mail] card commercial acceptance introducing the.

[C]

All new Adobe Acrobat studio now with AI powered PDF spaces. Do more with PDFs than you ever thought possible. Need AI to turn 100 pages of market research into 5 insights with a click. Do that with Acrobat. Need templates for a sales proposal that'll close that deal. Do that with Acrobat. Need an AI specialist to tailor the tone of your market report to sound real smart in real time. Do that with the all new Adobe Acrobat Studio. Learn [e-mail] do that with Acrobat. You're listening to the Bloomberg Intelligence Podcast. Catch us live weekdays at 10am Eastern on Apple CarPlay and Android Auto with the Bloomberg Business app. Listen on demand wherever you get your podcasts or watch us live on YouTube.

[E]

The biggest IPO of the year Price last night Medline. It's not really sexy. It's like a medical device company, but it's like a six plus billion dollar ipo. It's just extraordinary. Got some blue chip private equity folks behind it. I have no idea what this company does, but I know who does, and that's Jonathan Palmer. He's a analyst at Bloomberg Intelligence. He covers all the healthcare device companies and things like that. And the good thing about Bloomberg Intelligence, we're not an underwriter, we're not a broker dealer. We can write on private companies, we can write research on private companies, we can write research on IPO companies. And that's exactly what Jonathan did. So he's out there with a definitive view on this company for investors. Jonathan, what does Medline do here and why are they coming public?

[G]

Thanks, Paul, for having me. So Medline is what's traditionally thought of as a distributor, but I'd argue it's more than that. So really, this company's been around for decades. It started by the Mills family in the 60s. In 2021 they sold to private equity and now they're coming back to the public markets. You know, what they traditionally did was provide distribution and logistics to hospitals. But over the years they actually started making their own products. So things like masks, drapes, sutures, all the stuff that kind of you need in a surgery or to take care of patients. It's not too Sexy, but has a much better margin than logistics. So half the company today is their own Medline brand products. Half of it is distribution services. The secret sauce here is that they basically give, they don't give it away, but they can essentially give away the distribution and logistics piece while capturing all the margin on the product side.

[C]

How much market share do they have? I mean, I've gone to hospitals before and seen the Medline name attached to, I don't know, like a bed, for instance, or you know, the canister on the wall where you get your gloves.

[E]

Yeah, that's a good question.

[G]

I mean, I think it depends. It would depend on the product category. I mean, from a, from the distribution side, they're just a little bit bigger than their peers like Cardinal Health and what was Owens and Minor. It's kind of a oligopoly where those big three players are distributing to all the health care facilities. You know, in terms of products, you know, it's about half of revenue. So roughly 12, 15 billion right here.

[C]

What about tariffs? How affected by tariffs are there? Because I can't imagine that these items, gloves, masks, swabs, syringes are made in.

[G]

The U.S. well, they do have a fair amount of manufacturing in the United States. They have talked about tariffs, a couple hundred million impact this year and next year. I mean, to be honest with you, for a company this size and this scale, that, that's a pretty surmountable hurdle. You know, it'll get priced in in the next round of contract negotiations and it'll be, you know, business as usual, going off going forward.

[E]

As a former banker, I just look at the, the deal dynamics here. Upsized offering, offering finished north of 10 times oversubscribed. Top 10 investors in this allocation took more than 50% of the shares from top 25 investors took about 80% of the deal. Here are the private equity guys. Are they selling here or is this just company shares?

[G]

It's a combination of both. The Mills family still owns about 20% of the company and they're not selling any shares.

[B]

Good.

[E]

What are use of proceeds here, do you think?

[G]

I'm sorry, what are the use of proceeds here?

[E]

What are they going to use the money for?

[G]

Primarily to pay down debt. They had about $16 billion of debt that they levered up on the private equity transaction and they're paying down a pretty healthy slug of that right here.

[E]

Stock hasn't even opened yet. I mean, when I was doing this.

[C]

Is the ticker to watch when I.

[E]

Was doing this 10, 30, if I didn't have it open by 10:30.

[C]

It's usually not till the noon hour.

[E]

Now I know my boss would come over and smack me with his tennis racket. That's happened many times.

[C]

You're not allowed to do that.

[E]

We're opening up this kid.

[G]

Let's go, let's go.

[C]

You had mentioned that some of its traditional competitors, like Cardinal Health for instance, is that still a competitor in that do. Does Cardinal Health also make its own products and sell it under its own name?

[G]

They do, but not at the same scale as Medline. And that's like I mentioned before, really been their secret sauce and how they've out competed their, their peers. The other thing that's interesting is Cardinal, you know, Cardinal is much more of a drug distributor with this medical division. I don't think they want to be in that business long term. Owens and Minor actually just sold their business for a couple hundred million to private equity. So Medline's the queer, queer. Number one gold standard player in this space.

[E]

15 to 17 times forward. EBITDA? Are you kidding me? This isn't a technology company, it's a health care company.

[G]

Well, to put it into context though, product companies, you know, the Medtronics, the Becton, Dickinson, the Abbott Labs, they're all trading 20 times. So really it's getting a discount relative to product companies and it's kind of priced in line with the health care distribution companies like The Cardinal Health, McKesson, so forth.

[C]

I'm looking at the cornerstone investors. There is at least eight of them. They lined up more than $2.3 billion in commitments. What does that tell you about the investor base of Medline?

[G]

Well, to me it says that this is a very stable business. I mean, they've talked about growing the top line high single digits and adjusted EBITDA by the same or better. I mean, I think this is a story that's going to unfold over multiple years where, you know, they're going to come out of the gate, they're going to hit their numbers, they'll pay down debt so their leverage goes down. You know, post this private equity era and then we'll probably see some more CAT or shareholder friendly capital deployment. Whether it's buybacks, you know, this would seem like a good business to have a dividend. Ultimately.

[E]

Does the health care industry broadly define that they like this administration or are they concerned that maybe some regulatory risk might be out there?

[G]

I think it depends on who you ask.

[E]

Okay.

[G]

I mean, I think uncertainty, nobody likes uncertainty in the business world, right? And there's been a lot of uncertainty around health, healthcare in particular. I mean, these companies in the service industry have been maybe a little less in the spotlight than, let's say, the drug and pharmaceutical industry. But you know, at the end of the day, people get sick, they need to go to the hospital, they need operations, they need to see doctors. It's business as usual.

[C]

This is the Bloomberg Intelligence Podcast, available on Apple, Spotify and anywhere else you get. Your podcasts listen live each weekday 10am to noon Eastern on Bloomberg.com, the iHeartRadio app, TuneIn, and the Bloomberg Business app. You can also watch us live Every weekday on YouTube and always on the Bloomberg terminal.

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