Paramount has upped the ante in its hostile takeover bid for Warner Bros. Discovery, announcing Monday that Larry Ellison will personally guarantee the tens of billions of dollars he is putting up to bankroll the transaction. The Ellisons will also let shareholders peer into the finances of their family trust.
Paramount has upped the ante in its hostile takeover bid for Warner Bros. Discovery, announcing Monday that Larry Ellison will personally guarantee the tens of billions of dollars he is putting up to bankroll the transaction.
The Ellisons will also let shareholders peer into the finances of their family trust. The Warner Bros. board of directors has rejected Paramount’s bid multiple times, opting instead to go with an offer from Netflix, which WBD says is more valuable. The board also said Paramount has misrepresented itself to WBD shareholders, calling into question the legitimacy of the deal’s “illusory” proposed financing. To counteract that critique, Paramount said Oracle founder Larry Ellison – the father of Paramount CEO David Ellison – will guarantee all $40.4 billion of the equity he’s putting up to finance the $78 billion deal. That’s a big guarantee, putting Larry Ellison on the hook for about a sixth of his roughly $250 billion net worth if something falls through. Larry Ellison also agreed not to revoke his family trust, which could have complicated the potential financing of the deal, and Paramount is publishing records that confirm the trust owns 1.16 billion Oracle shares, which the WBD board called into question. Paramount also upped its breakup fee to $5.8 billion from $5 billion, matching Netflix’s promised payment to Warner Bros. Discovery shareholders if the deal were to fall through. One aspect of Paramount’s offer that hasn’t changed: its overall value. Paramount offered $30 per share for WBD, including CNN and the rest of its cable channels. Netflix offered $27.75 per share for Warner Bros. and HBO. But Netflix and WBD argue that plans to spin off the cable assets will increase those stations’ overall value and will, in total, value the company more highly than Paramount’s deal. WBD’s board will be expected to respond to Paramount’s revised offer. Because the changes address some but not all of WBD’s concerns, it’s not clear that the board will change its mind. But shareholders also have a say, and the hostile nature of Paramount’s offer mean that owners of WBD’s stock could reject the board’s recommendation. The Paramount offer is financed in large part by the royal families of Saudi Arabia, Qatar and Abu Dhabi, and WBD’s board has raised concerns about why Larry Ellison, one of the world’s richest people, needs so much help to bankroll the deal. Paramount has said it has “air tight financing,” and David Ellison has publicly called WBD “absurd” for questioning whether or not the deal’s backers are good for the money. WBD shares jumped 4% Monday. Paramount shares rose 3% and Netflix’s stock was unchanged. This story has been updated with additional developments and context.
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