Unlock Editor’s Digest for free
FT editor Roula Khalaf selects her favorite stories in this weekly newspaper.
Oracle co-founder Larry Ellison has agreed to personally bankroll the $40bn equity financing of Paramount’s $108bn hostile bid for Warner Bros. Discovery, in an effort to resolve doubts about the financing of the offer.
Paramount said Monday that Ellison, one of the world’s richest men, had agreed to provide “an irrevocable personal guarantee” for Paramount’s $40.4 billion equity financing of the failed Netflix deal for WBD, which is being led by the billionaire’s son David.
However, Paramount did not increase its offering price and kept it at $30 per share in cash. A person close to Paramount said the move was intended to force WBD back to the negotiating table. If WBD showed good faith, Paramount would be willing to raise its offering price, the person said.
WBD last week asked shareholders to vote in favor of Netflix’s roughly $83 billion bid for its studios and streaming business, arguing that Paramount’s offer for the entire business, including its cable channels, was “weak.”
This he attributed partly to the lack of a personal guarantee by Larry Ellison, with the deal instead being held by the family’s revocable family trust.
As part of its efforts to persuade WBD to rejoin its proposal, Paramount said Monday that Ellison has agreed not to cancel the family trust in which it has served as counterparty to many transactions over the past four decades. Paramount also published records confirming the trust’s ownership of 1.16 billion shares of Oracle common stock.
The improved proposal would have increased the termination fee payable in the event that regulators block the deal from $5 billion to $5.8 billion to match the promise made by Netflix. Paramount also extended the tender offer deadline to January 21, giving WBD shareholders more time to consider attempting to hijack an $83 billion takeover offer from Netflix.
Paramount called on WBD to provide shareholders with more information about how it values ​​rival offers, arguing that last week’s filing omitted key financial analysis, including the valuation of WBD’s cable networks division, which includes CNN and Discovery, and valuing Paramount at $1 a share.
Paramount Chief Executive David Ellison said, “We expect WBD’s board of directors to take the necessary steps to secure this value-enhancing transaction and preserve and strengthen an iconic Hollywood treasure for the future.”
Paramount’s move comes as Netflix announced it has partially refinanced a $59 billion bridge loan it raised from Wells Fargo, BNP Paribas and HSBC to finance its acquisition proposal. The streaming giant tapped 15 other banks around the world to secure a $20 billion term loan and a $5 billion revolving credit facility, giving it access to long-term financing for the acquisition fight.
Paramount’s effort to derail Netflix’s acquisition of WBD is expected to take several weeks or even months unless WBD decides to align with the Ellison family, said one person involved in the hostile bid.
WBD declined to comment. Netflix did not immediately respond to requests for comment.
