Paramount Skydance Corp. amended its bid for Warner Bros. Discovery Inc., including by offering a personal financial guarantee by Oracle Corp. Chairman Larry Ellison, as it seeks to beat out a rival bid from Netflix Inc.
Ellison, one of the richest people in the world, agreed to provide an irrevocable personal guarantee of $40.4 billion in equity financing for Paramount’s proposed $108.4 billion offer for Warner Bros., according to a statement Monday. Ellison, whose son David Ellison is chief executive officer of Paramount, agreed not to revoke the Ellison family trust or adversely transfer its assets while the transaction is pending. Paramount’s $30-a-share offer remains unchanged.
Paramount confirmed that the Ellison family trust owns about 1.16 billion shares of Oracle common stock and that all material liabilities are publicly disclosed. The company also offered to increase its regulatory reverse termination fee to $5.8 billion fee from $5 billion.
“In an effort to address Warner Bros.’s amorphous need for ‘flexibility’ in interim operations, Paramount’s revised proposed merger agreement offers further improved flexibility to Warner Bros. on debt refinancing transactions, representations and interim operating covenants,” Paramount said in its statement.
Paramount has been aggressively pursuing Warner Bros. for months and the battle for one of Hollywood’s most storied studios has taken an increasingly acrimonious turn. David Ellison was taken by surprise earlier this month when the Warner Bros. board agreed to a deal with Netflix for $82.7 billion for the streaming and studio assets. Paramount subsequently launched a hostile takeover offer in a direct appeal to shareholders. Warner Bros. board urged shareholders to reject Paramount’s offer, which includes $54 billion in debt commitments, deeming it “inferior” and “inadequate.” The board took special aim at the uncertain financing and the risk implicit in a revocable trust that Paramount could terminate the deal at any time.
Paramount, controlled by the Ellisons, is competing with the most valuable entertainment company in the world to acquire Warner Bros., one of Hollywood’s most storied studios, as well as HBO, one of the crown jewels of the TV business. Executives from both Paramount and Netflix have argued that they would be the best owners and utilize the coveted Warner Bros. library to boost their streaming operations.
In its letter to shareholders and a detailed 94-page regulatory filing last week, Warner Bros. hammered away at risks in the Paramount offer, including what the company described as the Ellison family’s failure to adequately backstop their equity commitment. The equity is supported by “an unknown and opaque revocable trust,” the board said. The documents Paramount provided “contain gaps, loopholes and limitations that put you, our shareholders, and our company at risk.”
Netflix also announced Monday that it has refinanced part of a $59 billion bridge loan with cheaper and longer-term debt, bolstering the financial package underpinning its bid for Warner Bros.
Schuetz writes for Bloomberg.
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