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Oracle co-founder Larry Ellison has agreed to personally backstop the $40bn equity financing of Paramount’s $108bn hostile bid for Warner Bros Discovery, in an attempt to resolve doubts about the financing of the offer.
Paramount said on Monday that Ellison, one of the world’s richest men, had agreed to provide “an irrevocable personal guarantee” for the $40.4bn equity financing of Paramount’s attempt to gatecrash Netflix’s deal for WBD, which is being led by the billionaire’s son David.
However, Paramount did not increase its offer price, keeping it at $30 a share in cash. A person close to Paramount said the move was aimed at forcing WBD back to the negotiating table. If WBD showed goodwill, Paramount would be open to upping its offer price, the person added.
WBD last week told shareholders to vote in favour of Netflix’s nearly $83bn bid for its studio and streaming business, arguing that Paramount’s offer for the whole business, including its cable channels, was “inferior”.
It attributed this in part to the lack of a personal guarantee by Larry Ellison, with the deal instead backstopped by the family’s revocable family trust.
As part of its efforts to persuade WBD to re-engage with its offer, Paramount on Monday said Ellison had agreed not to revoke the family trust, which it added had acted as a counterparty to numerous transactions over the past four decades. Paramount also published records confirming the trust’s ownership of 1.16bn shares of Oracle common stock.
The improved offer upped the termination fee payable in the event that regulators block the deal from $5bn to $5.8bn, to match that promised by Netflix. Paramount also extended the deadline for the tender offer until January 21, giving WBD shareholders more time to mull the attempt to hijack the $83bn takeover offer from Netflix.
Paramount called for WBD to give shareholders more information about how it valued the rival offers, arguing that last week’s filing omitted crucial financial analysis including the valuation of WBD’s cable networks division, which includes CNN and Discovery and that Paramount values at $1 a share.
“We expect the board of directors of WBD to take the necessary steps to secure this value-enhancing transaction and preserve and strengthen an iconic Hollywood treasure for the future,” said David Ellison, Paramount’s chief executive.
Warner said it would review Paramount’s amended offer and update shareholders with its recommendation, advising them “not to take any action at this time with respect to the amended Paramount Skydance tender offer”.
Paramount’s move came as Netflix announced that it had partly refinanced the $59bn bridge loan it had obtained from Wells Fargo, BNP Paribas and HSBC to fund its takeover offer. The streaming giant tapped a further 15 banks globally to secure $20bn of term loans and a $5bn revolving credit facility, giving it access to longer-term financing for the takeover fight.
Paramount’s effort to derail Netflix’s takeover of WBD was expected to take several weeks or even months unless WBD decides to engage with the Ellison family, said a person involved in the hostile bid.
WBD declined to comment. Netflix did not immediately respond to requests for comment.
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