Paramount Skydance announced on Monday a revision to its proposed acquisition of Warner Bros Discovery, including an irrevocable personal guarantee of US$40.4 billion made by Larry Ellison, founder of
The move directly responds to criticism from the Warner Bros Discovery board, which had rejected previous offers because it considered financing uncertain and dependent on a revocable family trust.
The offering maintains a $30 per share cash value for the entire company, totaling about $108 billion in enterprise value.
Paramount also raised the breakup fee to US$5.8 billion, equaling the proposal from Netflix, a rival in the dispute.
Personal guarantee of Ellison
Larry Ellison personally committed the $40.4 billion of equity capital required for the transaction.
He agreed not to revoke the family trust or adversely transfer assets during the process.
The company released documents confirming that the trust owns 1.16 billion shares of Oracle.
This guarantee represents about a sixth of Ellison’s estimated fortune, in excess of US$240 billion.
Context of the dispute
Warner Bros Discovery prefers the agreement with Netflix, which provides for the sale of only the studios, HBO and streaming for a lower price, but considered safer by the board.
Netflix offers about $27.75 per share, excluding cable assets like CNN.
Warner argues that separating these assets would increase total shareholder value.
The Paramount offering covers the entire company, including cable TV channels.
Market reactions
Shares of Warner Bros Discovery rose about 4% after the announcement.
Shares of Paramount registered an increase of 3%.
The market reacts positively to the greater certainty of financing in the revised proposal.
Analysts note that the final decision may depend on shareholders, given the hostile nature of the offer.
Financing details
The financing relies on debt commitments from banks such as Bank of America and Citi.
Part of the capital comes from Oriente Médio sovereign wealth funds.
Paramount claims to have solid financing and a simpler regulatory path by keeping the company together.
The board of Warner remains uncertain about regulatory risks and comparative value.
Position of the companies involved
David Ellison highlighted the commitment to preserving Hollywood’s iconic assets.
Netflix defends its agreement as more certain and beneficial for creators.
The Warner board is expected to respond shortly to the revised proposal.
Shareholders will have a decisive voice in any vote.
Next steps in negotiation
The hostile offer allows Paramount to take the proposal directly to Warner’s shareholders.
To overcome the agreement with Netflix, majority approval would be required.
Analysts expect more movements in the coming days.
The dispute reflects consolidation in the entertainment and streaming sector.
- Personal guarantee: Larry Ellison assumes direct risk of US$40.4 billion.
- Breakout rate: Elevada to US$5.8 billion, same as Netflix.
- Value per share: Mantido at $30 for all of Warner Bros Discovery.
- Netflix Exclusions: Acordo does not include channels such as CNN and Discovery.
Evolution of offers
Paramount began contacts in September with an initial proposal of US$ 19 per share.
It gradually increased to $30 in cash.
Warner rejected six previous proposals.
He opted for the agreement with Netflix announced in December.
The current review addresses specific criticisms about funding.
Implications for the sector
A combination would create a behemoth with franchises like Top Gun, Harry Potter and HBO.
It would increase scale in production and distribution.
Regulators would analyze impacts on competition.
The dispute highlights challenges for traditional studios in the face of streaming.
