Larry Ellison offers $40bn guarantee in revised WBD offer

Larry Ellison has agreed to provide a personal guarantee of more than $40bn (£29.9) for Paramount Skydance’s fight to gain control of Warner Bros Discovery (WBD).

WBD has said that the full equity backstop from the Ellison family trust – which was included in Paramount’s December 4 proposal to WBD and the December 8 tender offer to WBD shareholders – was inadequate, and that the only fix would be a personal guarantee from the billionaire father of Paramount chief executive David Ellison.

A Paramount statement issued on yesterday (22 December) noted: “None of these concerns, nor the demand for a personal guarantee, were raised by WBD or its advisors to Paramount in the 12-week period leading up to WBD agreeing to the inferior transaction with Netflix.”

Later in the day, WBD issued a statement saying it had received the amended tender offer and would review it, adding: “The board is not modifying its recommendation [to shareholders] with respect to the Netflix Merger Agreement.”

To match the pending transaction, Paramount will increase its regulatory reverse termination fee from $5bn to $5.8bn, matching that of Netflix. Paramount has extended the end date for the tender offer to 21 January 2026.

Paramount’s statement also noted that, “In an effort to address WBD’s amorphous need for ‘flexibility’ in interim operations, Paramount’s revised proposed merger agreement offers further improved flexibility to WBD on debt refinancing transactions, representations and interim operating covenants.”

Paramount is aiming to acquire Warner Bros and 100% of the Global Networks business, whereas Netflix’s offer, which is preferred by the WBD board, is only for the Warner Bros studios and streaming businesses.

On December 5, Netflix confirmed it would acquire Warner Bros in a deal worth $82.7bn, under which Netflix will acquire its film and television studios, HBO Max and HBO, but not Discovery Global. The cash and stock transaction was valued at $27.75 per WBD share with a total enterprise value of approximately $82.7bn (equity value of $72bn).

On December 8, Paramount went directly to the WBD shareholders with its hostile all-cash bid to acquire all of the company for $30 a share that gave the target an enterprise value of $108bn.

On December 17, the WBD board reiterated its support for the Netflix offer.

Paramount maintains that there is a lack of clarity from the WBD board regarding the calculations through which it has concluded that the Netflix offer is superior.

David Ellison said: “Paramount has repeatedly demonstrated its commitment to acquiring WBD. Our $30 per share, fully financed all-cash offer was on 4 December, and continues to be, the superior option to maximise value for WBD shareholders.

“Because of our commitment to investment and growth, our acquisition will be superior for all WBD stakeholders, as a catalyst for greater content production, greater theatrical output, and more consumer choice. 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.”

• This story first appeared in our sister publication ScreenDaily