Hollywood’s largest-ever merger battle has escalated to a fever pitch as Paramount Skydance officially announced on Monday, December 22nd, a revised acquisition offer for Warner Bros. Discovery. In order to fend off competition from Netflix, Oracle co-founder and chairman Larry Ellison has decided to personally enter the fray by providing a whopping $40.4 billion in personal financial guarantees for the deal.
Previously, the Warner Bros. board of directors had repeatedly rejected Paramount’s all-cash proposal of $30 per share, totaling $108.4 billion, citing “opaque financing”, and instead supported Netflix’s proposal valued at around $82.7 billion. The Warner board questioned the previous funding commitments from the Ellison family, which were supported only by an “opaque revocable trust”, raising concerns about the risk of the deal being terminated at any time.
In response, Larry Ellison unveiled a major trump card in the revised proposal on Monday. He will provide $40.4 billion in irrevocable personal guarantees to ensure the equity financing is secured. He also confirmed that his family trust holds approximately 1.16 billion shares of Oracle stock and pledged not to revoke the trust or transfer assets during the transaction. Additionally, the regulatory break-up fee was increased from $5 billion to $5.8 billion, matching Netflix’s compensation terms.
This deal holds significant milestone significance for Paramount CEO David Ellison. With the backing of his father, Larry Ellison, a global top billionaire, Paramount is attempting to bypass the Warner board and appeal directly to shareholders through a competitive acquisition.
According to the latest data from Forbes, Larry Ellison’s current net worth is as high as $242.7 billion, making him the third-richest person globally, only trailing SpaceX/Tesla CEO Elon Musk and Google co-founder Larry Page.
In comparison, while Netflix’s offer may have a lower total value, it has received a “unanimous recommendation” from the Warner board. Netflix also bolstered its defenses on Monday by announcing a successful refinancing of some of its acquisition loans, optimizing its debt structure.
Encouraged by this significant positive news, Warner Bros. Discovery saw a 4% jump in pre-market stock prices on Monday, while Paramount (PSKY) rose over 2%. The market is closely watching whether Warner shareholders will be swayed by the formidable financial strength and determination displayed by the Ellison family.
(This article references reports from CNN, Forbes, and Bloomberg)