Paramount Skydance seeks to reassure Warner Bros. Discovery shareholders that Warner Bros. Discovery’s hostile takeover bid is solid, saying Larry Ellison has made an “irrevocable personal guarantee of $40.4 billion” against WBD’s $108 billion all-cash offer to break the deal with Netflix.
Paramount, led by Chairman and CEO David Ellison (Larry’s son), also increased its breakup fee to match Netflix’s $5.8 billion that would be paid to WBD if the deal fails regulatory review. Paramount announced Monday that it is continuing its offer of $30 per share in cash for 100% of WBD’s outstanding stock. This will be a bid for all assets and liabilities of WBD.
Oracle co-founder Larry Ellison, whose current net worth is estimated at about $243 billion, funded the majority of Skydance Media’s $8 billion acquisition of Paramount Global. That merger was completed in August.
WBD representatives did not respond to requests for comment.
Paramount’s bid is also backed by sovereign wealth funds from Saudi Arabia, Qatar and Abu Dhabi, Variety first reported. (Paramount Skydance’s Dec. 1 offer for the entire WBD included $10 billion from Saudi Arabia’s Public Investment Fund, $7 billion from Abu Dhabi’s Rimad Holding and $7 billion from the Qatar Investment Authority.) WBD’s board had expressed concerns that it would trigger a questionable national security review by the U.S. government. In response, Paramount said in an SEC filing that three Arab wealth funds “agreed to waive any governance rights, including board representation, associated with non-voting equity investments.” Separately, Affinity Partners, an investment firm led by Jared Kushner (President Trump’s son-in-law), declined Paramount’s offer for WBD last week.
“Paramount has reiterated its commitment to acquiring WBD,” David Ellison said in a statement Monday. “The all-cash offer of $30 per share was made on Dec. 4 and remains an excellent value-maximizing option for WBD shareholders. We are committed to investing and growing.” “Our commitment to this will make our acquisition a good fit for all WBD stakeholders, facilitating expanded content production, expanded theatrical production, and expanded consumer choice. We look forward to the necessary actions being taken by WBD’s Board of Directors.” We will secure this value-enhancing deal and take steps to preserve and enhance this iconic Hollywood treasure for the future. ”
On December 17, WBD’s board of directors formally rejected Paramount’s offer and recommended that Warner Bros. Discovery shareholders stick to their $83 billion deal with Netflix. Under the deal, the streaming giant would acquire Warner Bros. TV and movie studios, HBO and HBO Max, and gaming.
Specifically, Warner Bros.’ board of directors said last week that Paramount “has consistently misled WBD stockholders as if the proposed transaction had a ‘full backstop’ from the Ellison family. That is not the case, and never has been.” According to Warner Bros.’ Discovery board, Paramount Skydance’s previous offer on Dec. 4 included a $40.65 billion equity commitment, but “there is no commitment of any kind from the Ellison family. Instead, we are proposing to rely on an unknown and opaque revocable trust for the certainty of financing this important transaction.” WBD said the only solution was a personal guarantee from Larry Ellison.
Paramount said that in the 12 weeks prior to agreeing to the Netflix deal, WBD had not raised any concerns about the terms of Paramount’s loan, including the “request for a personal guarantee” from Larry Ellison. This time, Paramount said it has “elected to address the concerns currently expressed by WBD” by making an amended offer to WBD shareholders.
The improved components provided by Paramount Skydance include:
Larry Ellison’s Irrevocable Personal Guarantee: The tech mogul has agreed to provide an irrevocable personal guarantee for $40.4 billion in equity financing for the offer and $40.4 billion in damages against Paramount. As part of the deal, Larry Ellison agreed not to revoke the Ellison family’s trust or “improperly transfer its assets pending the transaction.” Verification of Trust Assets: Paramount has published records confirming that the Ellison Family Trust owns approximately 1.16 billion shares of Oracle common stock and that all material liabilities of the Ellison Family Trust are disclosed. Increased flexibility for WBD with respect to debt refinancing: To address WBD’s “amorphous needs for ‘flexibility’ in interim operations, Paramount’s revised proposed merger agreement will further increase WBD’s flexibility with respect to debt refinancing transactions, representations and interim operating terms,” Paramount said. Regulatory termination fees comparable to Netflix: Paramount increases regulatory termination fees from $5 billion to $5.8 billion.
In connection with the Enhanced Offer, Prince Sub Inc., a direct, wholly-owned subsidiary of Paramount (the entity formed to pursue the hostile bid), will extend the expiration date of its tender offer for WBD stock until January 21, 2026 at 5:00 p.m. Eastern Time, unless further extended.
For Paramount’s hostile bid to break the Netflix contract, both WBD’s board of directors and WBD stockholders would need to approve the offer, unless they vote in favor of the offer and Paramount receives at least 90% of the outstanding WBD common stock.
Paramount has launched a website at Stronghollywood.com with information and updates about the WBD offer. Netflix’s site with details of its deal with Warner Bros. is netflixwbtogether.com.
Inside the sensitive WBD-Paramount deal negotiations: Ellisons offered Zaslav a salary package worth ‘hundreds of millions of dollars’, but Zaslav said it was ‘inappropriate’ to discuss it
