Paramount Skydance has adjusted its bid for Warner Bros. Discovery, including a personal financial guarantee from Oracle chairman Larry Ellison, in an attempt to outdo Netflix’s competing bid.
Ellison, one of the world’s richest men, has agreed to provide an irrevocable personal guarantee of $40.4 billion in equity financing for Paramount’s $108.4 billion bid for Warner Bros., according to a statement released Monday. Ellison, whose son David Ellison is CEO of Paramount, has pledged not to revoke the Ellison family trust or transfer its assets while the deal is ongoing. Paramount’s offer of $30 per share remains the same.
Paramount confirmed that the Ellison family trust owns approximately 1.16 billion shares of Oracle common stock and that all material liabilities are publicly disclosed. The company also offered to increase the regulatory termination fee to $5.8 billion, up from $5 billion previously.
“To meet Warner Bros.’s undefined need for ‘flexibility’ in temporary operations, Paramount’s revised merger agreement provides Warner Bros. more flexibility in debt refinancing transactions, guarantees and temporary operating agreements,” Paramount said in a statement.
Paramount has been reaching out to Warner Bros. aggressively for months, and the dispute over the studio, one of the most traditional in Hollywood, has become increasingly fierce. David Ellison was surprised earlier this month when the board of Warner Bros. approved a deal with Netflix worth $82.7 billion for streaming and studio assets. Paramount then launched a hostile bid directly to shareholders. The Warner Bros. board recommended that shareholders reject Paramount’s offer, which includes $54 billion in debt commitments, as “inferior” and “inadequate.” The board was especially critical of uncertain financing and the risk of a revocable trust that would allow Paramount to terminate the deal at any time.
Controlled by the Ellison family, Paramount is competing with the most valuable entertainment company in the world to acquire Warner Bros., one of Hollywood’s most traditional studios, as well as HBO, one of TV’s greatest jewels. Executives at Paramount and Netflix say they would be the best owners and would use Warner Bros.’ valuable catalog. to boost your streaming operations.
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In a letter to shareholders and a detailed 94-page regulatory document released last week, Warner Bros. highlighted the risks of Paramount’s bid, including what it called the Ellison family’s failure to adequately secure its financial commitment. The capital would be backed by “an unknown and opaque revocable trust,” the board said. The documents provided by Paramount “contain gaps, loopholes, and limitations that put you, our shareholders, and our company at risk.”
On Monday, Netflix also announced that it has refinanced part of a $59 billion bridge loan with cheaper, longer-term debt, strengthening the financial package underpinning its bid for Warner Bros.
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