Larry Ellison offers guarantee worth $40B for Paramount-Warner Bros deal
What's the story
Oracle co-founder Larry Ellison has pledged a personal guarantee of $40.4 billion for the equity financing of Paramount Skydance's bid to acquire Warner Bros. Discovery. The revised terms, announced by Paramount, do not alter the original all-cash offer of $30 per share. The move comes as part of a fierce bidding war in Hollywood that could significantly impact the future of streaming services and content libraries.
Industry impact
Paramount's bid triggers industry-wide bidding war
The bidding war for Warner Bros was triggered by Netflix's $82.7 billion valuation of the studio and its streaming assets. This prompted Paramount Skydance to launch a hostile takeover attempt, sparking an industry-wide bidding war that could reshape the entertainment landscape. The rival bids involve multi-billion-dollar debt deals, some of the largest in a decade, highlighting the high stakes involved in this acquisition battle.
Deal dynamics
Warner Bros. Discovery's response to Paramount's offer
Warner Bros. Discovery has advised its stockholders to reject Paramount's bid in favor of its original agreement with Netflix. The company described Paramount's offer for the entire firm, which includes $54 billion in debt commitments, as "inferior and inadequate." It also said that the financing of the deal was too risky and could potentially jeopardize its financial stability.
Guarantee
Ellison's guarantee addresses concerns
The revised offer from Paramount has an irrevocable personal guarantee from Ellison covering $40.4 billion of equity financing and any potential damages claims. This was a key demand flagged by Warner Bros. Discovery in recent disclosures and public statements. The company also disclosed that the trust owns around 1.16 billion shares of Oracle common stock, with all material liabilities publicly disclosed, further addressing financing risk concerns.
Offer adjustments
Paramount's revised offer includes operational flexibility
Along with the personal guarantee, Paramount's revised offer gives Warner Bros. Discovery more operational flexibility during the interim period. This includes an expanded leeway on debt refinancing, representations, and operating covenants. The firm has also increased the regulatory reverse termination fee to $5.8 billion from $5 billion, matching protections in Warner Bros's pending Netflix transaction.
Shareholder appeal
Paramount urges shareholders to tender shares
As part of the revised proposal, Paramount's wholly owned subsidiary Prince Sub Inc, has extended the tender offer deadline to January 21, 2026. The company has filed tender offer materials with the US Securities and Exchange Commission and urged Warner Bros. Discovery shareholders to tender their shares. It reiterated its belief that this bid is a superior alternative to the Netflix agreement currently in place between Warner Bros. Discovery and Netflix Inc.