Paramount guarantees backing of Larry Ellison in Warner Bros. bid
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Paramount on Monday updated its takeover bid for Warner Bros. Discovery with a guarantee from Oracle chair Larry Ellison to provide an "irrevocable personal guarantee of $40.4 billion of the equity financing" for its offer.
Why it matters: When rejecting Paramount's hostile bid last week, the Warner Bros. board said that Paramount "misled shareholders" about the reliability of its backstop from Paramount CEO David Ellison's family because the backstop funding was coming from a revocable family trust that could be amended before the deal closed.
Zoom in: David Ellison, the son of Larry Ellison, also agreed "not to revoke the Ellison family trust (which has been operating for nearly 40 years as a counterparty to numerous transactions) or adversely transfer its assets during the pendency of the transaction," according to a Paramount statement.
- Later Monday evening, WBD's board confirmed receipt of Paramount's updated bid but said, "The Board is not modifying its recommendation with respect to the Netflix Merger Agreement."
- Netflix also on Monday said it secured up to $25 billion in bank financing to fund its bid for WBD's streaming and studio assets.
By the numbers: The amended bid notably did not include a price increase, as Paramount continues to argue that its $30-per-share offer is superior to Netflix's bid, which includes cash and stock worth $27.75 per WBD share.
- The Netflix bid valued Warner Bros. studio and streaming assets at $82.7 billion. The Paramount bid valued the entire Warner Bros. Discovery company, including its cable networks, at around $108 billion.
Yes, but: The amended Paramount bid did include a higher proposed breakup fee from $5 billion to match that of Netflix's $5.8 billion offer.
What's next: Paramount extended the deadline for Warner Bros. shareholders to tender their shares from Jan. 8 to Jan. 21.
Editor's note: This story was updated with additional details.
