The Big Bet: Larry Ellison Backs Paramount's Warner Bros. Discovery Bid
Tech Billionaire Steps Up to Secure Deal
Larry Ellison, a tech billionaire and father of Paramount's CEO, has personally guaranteed a massive $40.4 billion equity offer for Warner Bros. Discovery. This move aims to ease concerns raised by Warner Bros. Discovery's board about Paramount's initial proposal.
Background of the Deal
Warner Bros. Discovery recently struck a deal with Netflix, selling a significant portion of its business for $83 billion. They claimed Netflix's offer was more favorable to their shareholders than Paramount's $108 billion bid to take over the entire company. After the board turned down Paramount's offer, it was presented to the shareholders.
Concerns and Revisions
Last week, Warner Bros. Discovery advised its shareholders to reject Paramount's offer. One of their main worries was the lack of a personal guarantee from Larry Ellison. The original terms involved a revocable trust in Ellison's name, which the board felt didn't provide enough security if the deal fell through.
Paramount has now addressed this concern by securing a personal guarantee from Larry Ellison. This means one of the world's wealthiest individuals is now personally responsible if the deal collapses. Ellison is expected to get financial support from other partners, including about $24 billion from Middle Eastern sovereign wealth funds and debt financing from a group of banks.
Statements and Market Reaction
David Ellison, Paramount's CEO, stated:
"Paramount has shown time and again its dedication to acquiring WBD. We hope the board of directors of WBD will take the necessary steps to finalize this beneficial transaction and preserve a Hollywood icon for the future."
Shares of Warner Bros. Discovery rose nearly 4 percent in premarket trading. A company representative did not immediately respond to a request for comment.
Additional Changes to the Deal
Paramount also made other changes to the deal to address Warner Bros. Discovery's concerns. They increased the amount they would pay if regulators blocked the deal to $5.8 billion, up from $5 billion. Interestingly, Netflix has offered the same amount as part of its deal.
