American film producer David Ellison arrives at the premiere of Paramount Pictures’ “Transformers: Rise of the Beast” in New York City on June 5, 2023.
Angela Weiss | AFP | Getty Images
paramount skydance On Monday, he secured the support of billionaire Larry Ellison in the revised proposal. warner bros discovery — Clear answers to questions posed by the WBD Board.
“Larry Ellison has agreed to provide $40.4 billion in equity financing for the offer and an irrevocable personal guarantee for damages against Paramount,” the company said in a news release.
Paramount said Ellison, the father of Paramount CEO David Ellison, also agreed not to cancel the Ellison Family Trust or improperly transfer assets during the pending transaction. This guarantee does not replace committed funds from RedBird Capital and sovereign wealth funds, but constitutes an additional layer of security to the commitment.
Paramount Skydance intends to counter the agreement with Warner Bros. with a hostile attempt to offer Warner Bros. Discovery $30 per share in all cash. Netflix.
Last week, Warner Bros. Discovery Chairman Samuel Di Piazza told CNBC’s David Faber that the board had concerns about the supposed support. oracle Co-founder Larry Ellison also participated in the bid.
“I wasn’t sure whether one of the richest people in the world would attend the closing ceremony,” Di Piazza said at the time. “Making deals is great, but closing deals is even better.”
WBD agreed earlier this month to sell its studio and streaming assets to Netflix in a deal worth about $83 billion on a corporate basis. Paramount wants to acquire the entirety of WBD, including its portfolio of television networks, and has said its offer would have an enterprise value of $108.4 billion.
Notably, Paramount did not increase its bid on Monday, reiterating its belief that the deal is good, but Paramount did raise its proposed reverse breakup fee to match Netflix’s offer.
WBD confirmed receipt of the amended offer on Monday, saying in a release that it will “carefully review and consider Paramount Skydance’s offer in accordance with the terms of our agreements with Warner Bros. Discovery and Netflix.”
“What we’ve done with this amendment is we’ve cleared away the obfuscation around this proposal,” Jerry Cardinal, founder and managing partner of Redbird Capital Partners, said Monday on CNBC’s “Squawk Box.”
RedBird is an investor in Paramount Skydance and has also committed to financing Paramount’s planned acquisition of WBD.
Cardinale announced Monday that as part of his amended tax return, Larry Ellison would support his bid through an irrevocable trust backed by 1.2 billion Oracle shares.
“As with the previous six bids, we are responding to their concerns,” Cardinale said.
Shares of Warner Bros. Discovery rose 3% in early trading Monday, while Paramount rose more than 7%. Netflix stock fell nearly 1%.
Paramount vs. Netflix
Paramount made three offers to WBD in the fall, but the company rejected them all. WBD then began a formal sale process and accepted offers from other bidders, including Netflix.
Cardinale said Paramount’s unsolicited offer likely prompted WBD to sell, leaving Paramount at a “slight disadvantage.”
In a CNBC interview on Monday, Mr. Cardinale, like Mr. Ellison who appeared on CNBC last week, made a direct appeal to WBD shareholders.
“At the end of the day… the shareholders own this company. The board doesn’t own the company. (CEO) David Zaslav doesn’t own this company,” Cardinale said. “This should be much simpler than it is. It’s very simple.”
In addition to the question of value between the two bids, questions of regulatory approval have also been raised by Paramount and industry observers.
“The Netflix deal will kill competition,” Cardinale said, adding that combining streaming platforms Netflix and HBO Max would create 420 million subscribers under one roof. “It’s no wonder that the components of the ecosystem – the talent, the creators, the theater promoters – are losing their minds over this when they see the pricing power they will create.”
Netflix co-CEOs Ted Sarandos and Greg Peters said they were confident their deal would pass regulatory review. Sarandos also expressed peace of mind about the future of WBD’s theatrical releases under Netflix ownership.
At a press conference in early December, Sarandos argued that Netflix’s offering of WBD assets would help preserve jobs at a time of industry-wide layoffs.
