On Monday, Paramount announced that Oracle founder Larry Ellison personally guaranteed $40.4 billion of equity financing for its hostile takeover bid of Warner Bros. Discovery.
Ellison, the father of Paramount CEO David Ellison, agreed to be responsible for the entire $40.4 billion and any potential damage claims, making the guarantee irrevocable and personal.
Prior to this, Paramount had said the Ellison family trust would back more than $40 billion of its bid. Warner’s board criticized that, arguing Paramount had misled shareholders because a revocable trust is no substitute for a secured commitment.
In response, Paramount said Larry Ellison holds the majority of the trust’s assets and that Warner had not asked for a personal guarantee, yet it chose to address the concerns.
Paramount also raised its breakup fee to $5.8 billion-matching the fee Netflix has offered for its proposed transaction-and kept its $30 per share offer unchanged, while extending the tender window to January 21.
“Paramount has repeatedly demonstrated its commitment to acquiring WBD,” said David Ellison in a statement.
The all-cash bid values Paramount’s purchase of all of Warner’s properties, including CNN and Discovery, at $77.9 billion, excluding debt. Warner’s board, however, urged shareholders to support the cash-and-stock deal it struck with Netflix for $72 billion.
In a letter to shareholders last week, Warner’s board said the terms of the Netflix merger were superior and added, “the PSKY offer is illusory.”.
Netflix, meanwhile, disclosed it had refinanced part of its $59 billion bridge loan for its proposed acquisition. A regulatory filing detailed $15 billion in financing between revolving credit and delayed-draw term loans.
Market reactions were swift: shares of Paramount-Skydance rose more than 5% in Monday morning trading, Warner Bros. Discovery stock climbed almost 3%, and Netflix slipped about 0.7%.
Key Takeaways
- Larry Ellison’s personal guarantee strengthens Paramount’s bid.
- Paramount matched Netflix’s breakup fee and extended the tender deadline.
- Warner’s board remains skeptical, favoring the Netflix deal.
With the guarantee in place and the breakup fee raised, Paramount has positioned itself as a serious contender in the battle for Warner Bros. Discovery, while the market watches how the two major deals will unfold.
