Paramount revises WBD offer with $40.4 bn personal guarantee from Ellison

Paramount Skydance Corporation has amended its all-cash offer to acquire Warner Bros. Discovery Inc., increasing financial assurances after WBD raised concerns about the original proposal.

Paramount has now revised its offer to address WBD’s objections. The updated proposal includes an “irrevocable personal guarantee” from Larry Ellison covering $40.4 billion of equity financing for the offer and any related damages claims. Ellison has agreed not to revoke the Ellison family trust or transfer its assets during the transaction period.

It continues to offer $30 per share in cash for 100% of WBD’s outstanding shares, a transaction that would include all of WBD’s assets and liabilities.

In a filing dated December 17, WBD said the equity backstop supporting Paramount’s offer, provided by the Ellison family trust, was insufficient. The trust holds a majority of the assets of Larry Ellison, founder of Oracle and the controlling shareholder of Paramount. WBD said the issue could only be resolved with a personal guarantee from Ellison. Paramount said those concerns were not raised during the 12 weeks before WBD agreed to a separate transaction with Netflix Inc.

It is publishing records showing the trust owns about 1.16 billion shares of Oracle common stock and that all material liabilities of the trust are publicly disclosed.

The revised proposal also offers greater flexibility to WBD on debt refinancing, representations and interim operating covenants. In addition, it will raise its regulatory reverse termination fee from $5 billion to $5.8 billion to match WBD’s pending transaction.

The offer remains conditional on WBD continuing to own 100% of its Global Networks business. Paramount said all other terms of the offer are unchanged.

Paramount criticised WBD’s Schedule 14D-9 filing, saying it does not disclose the financial analyses used by WBD’s board to select the Netflix offer. Paramount said the filing also omits any valuation of the Global Networks' “stub equity,” which it values at $1 per share, and lacks details on how net debt adjustments under the Netflix deal would affect shareholder proceeds. Paramount said WBD shareholders should have that information to compare the two offers, including references by WBD advisors to a “risk adjusted” value for Paramount’s bid.

David Ellison, Chairman and CEO of Paramount, said, "Paramount has repeatedly demonstrated its commitment to acquiring WBD. Our $30 per share, fully financed all-cash offer was on December 4, 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."