Paramount Skydance announced a revision to its $30 per share all-cash hostile takeover bid for the entirety of Warner Bros. Discovery, valued at $108.4 billion, by including a personal guarantee by Oracle founder and Paramount controlling shareholder Larry Ellison, father of Paramount CEO David Ellison, to backstop $40.4 billion of the equity financing for the offer.
The amendment doesn’t increase the amount of the conglomerate’s hostile offer for all of WBD, which it claims is superior to Netflix’s winning bid for the company’s streaming and studio businesses only that was selected by the WBD board and is valued at $82.7 billion.
However, it does address an earlier-stated core concern from WBD, which last week recommended shareholders reject Paramount’s earlier hostile bid. The offer’s equity financing was backstopped by the Ellison family trust, but among other detailed issues, WBD said it wasn’t confident the elder Ellison’s money would still be in the family trust by the time a deal would close.
“We were not confident that one of the richest people in the world would be there at closing,” WBD Chairman Samuel Di Piazza told CNBC.
Paramount claims that the concerns nor WBD’s demand for a personal guarantee by the elder Ellison were raised to Paramount prior to WBD agreeing to a deal with Netflix.
But on Monday said it chose to address WBD’s concerns and amend the offer, including Larry Ellison’s irrevocable personal guarantee of $40.4 billion of the equity financing for the bid and any damages claims against Paramount, as well as additional commitments related to the revocable Ellison family trust.
“Mr. Ellison has 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,” Paramount said in a statement.
“What we’ve done in this amended filing is we’ve cleared the brush of obfuscation around the offer,” said Gerry Cardinale, founder and managing partner of RedBird Capital Partners, on CNBC’s Squawk Box on Monday. Redbird is among the investors backing Paramount’s offer for WBD.
While it’s uncertain as to how WBD management will respond, the amended bid does make it clear that the Ellisons remain determined to keep coming at WBD and ultimately beat out Netflix for 102-year-old Hollywood conglomerate.
“Like we’ve done through the six bids that we’ve made, we are being responsive to what their concerns are,” Cardinale added.
Paramount continues to insist that it has an easier path to regulatory approval for a deal and that its bid is superior to that of Netflix, although both assertions are at least somewhat debatable – where questions around the valuation of WBD’s linear global network assets are also part of the equation.
The amended offer also ups Paramount’s “breakup fee” from $5 billion to $5.8 billion, matching Netflix. And it includes a clause regarding "further improved flexibility to WBD on debt refinancing transactions, representations, and interim operating covenants."
In pushing back last week, WBD said a combined company led by Paramount Skydance would be “dangerous levered.” WBD calculated debt would amount to 6.8 x earnings before taxes, interest, depreciation and amortization (EBITDA), estimated for 2026, or around $92 billion.
WBD also previously pushed back on Paramount’s estimates that the deal would yield as much as $9 billion in synergies, calling that an over-estimation.