Larry Ellison offers $40 bn guarantee for Paramount's Warner Bros bid

After Warner Bros board rejected its offer, Paramount Skydance said Larry Ellison will provide a $40.4 billion irrevocable personal guarantee backing its $108.4 billion bid

In the latest episode of the Warner Bros Discovery (WBD) acquisition bid, Paramount Skydance on Monday said Oracle co-founder Larry Ellison will personally guarantee $40.4 billion in equity financing to back its $108.4 billion all-cash offer.

 

This comes almost a week after the WBD's board recommended its shareholders to reject the hostile takeover bid by Paramount Skydance Corp, calling the offer "inferior" and "inadequate". The board disputed Paramount’s claims that its offer is fully guaranteed by the Ellison family, led by Oracle founder Larry Ellison.

 

Responding to WBD’s claim, Paramount said its offer is “superior” and that "Larry Ellison has agreed to provide an irrevocable personal guarantee of $40.4 billion of the equity financing for the offer and any damages claims against Paramount".

 

Larry Ellison is the father of David Ellison, the chief executive officer (CEO) of Paramount.

 

WBD's board had also said that Paramount's proposal relies on backing from "an unknown and opaque" Lawrence J Ellison Revocable Trust, whose assets and liabilities are not publicly disclosed and can change at any time.

 

Responding to it, Paramount said, "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".

 

It further added that the trust owns approximately 1.16 billion shares of Oracle common stock and that all material liabilities of the Ellison family trust are publicly disclosed.

 

"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 added.

 

Paramount took its bid directly to WBD's shareholders earlier this month after the latter announced a $83 billion deal with Netflix on December 5. Paramount has offered $30 per WBD share, compared with Netflix’s $27.75, and asked investors to reject the Netflix transaction. Its proposal includes acquiring WBD's cable networks and news operations, while the Netflix deal excludes the cable business and would close only after WBD completes its previously announced separation of those assets.

 

"Paramount continues to offer to purchase, for $30 per share in cash, 100 per cent of the outstanding shares of WBD, and therefore will assume all assets and liabilities of WBD," Paramount said.