Larry Ellison Personally Guarantees $40.4 Billion Equity for Paramount's Hostile WBD Bid
Ellison Backs Paramount Bid with Personal Guarantee
Oracle Corporation co-founder Larry Ellison has dramatically raised the stakes in the media sector's ongoing consolidation battle, agreeing to personally guarantee $40.4 billion in equity financing for Paramount Skydance's attempted acquisition of Warner Bros. Discovery (WBD). This commitment was announced Monday, following intense scrutiny from WBD regarding the financial certainty of the initial offer.
Paramount Skydance's renewed bid, which maintains a total valuation of $108 billion, includes an “irrevocable personal guarantee” from the billionaire. This action directly addresses a key point of contention raised by WBD's board, which had previously asserted that the only acceptable fix for the equity component would be a personal guarantee from Mr. Ellison himself.
WBD Urges Rejection Despite Bolstered Financing
Despite the substantial financial backstop provided by Ellison, Warner Bros. Discovery has maintained its stance, urging shareholders to reject the hostile takeover bid. The company reiterated its position Wednesday morning, stating that the offer provides “inadequate value and imposes numerous, significant risks and costs on WBD.”
WBD's rejection letter highlighted the initial lack of commitment for the equity portion, which was previously cited as a $40.65 billion equity offer for which “there is no Ellison family commitment of any kind.” While the personal guarantee from Larry Ellison now secures the majority of that capital, WBD continues to favor a rival proposal.
Warner urged its shareholders Wednesday morning to reject Paramount Skydance’s PSKY 0.31% hostile takeover bid, saying the Ellison family-led bid was inadequate on multiple levels compared with that of rival Netflix NFLX 0.41%.
Competitive Landscape and Valuation Discrepancies
The battle for WBD is fiercely contested, with Netflix (NFLX) presenting a rival offer that WBD has deemed superior. The Netflix proposal is reported to value WBD's studio and streaming businesses at $27.75 per share. This valuation benchmark is being used by WBD to argue that the Paramount Skydance offer is “inferior.”
The initial concerns raised by WBD four days ago centered on the reliability of the financing, questioning the commitment of the Ellison family trust to the deal. Paramount’s Monday announcement, which included the personal guarantee, was a direct response to these demands.
- The total valuation of the Paramount Skydance hostile bid remains at $108 billion.
- Larry Ellison's personal guarantee covers $40.4 billion of the equity financing.
- WBD previously questioned the commitment behind a $40.65 billion equity offer.
- WBD views the Netflix offer, valuing assets at $27.75 per share, as superior.
Market Implications and Forward View
The involvement of Larry Ellison, a figure known for his deep pockets and strategic investments, provides significant credibility to the Paramount Skydance (PSKY) bid, transforming a previously shaky financing structure into a firm commitment. However, the core issue remains valuation. WBD's board is focused on maximizing shareholder value, and the current $108 billion offer is still perceived as insufficient when compared to the implied value from the Netflix proposal.
The ongoing negotiation highlights the intense competition for premium media assets in the streaming era. For WBD shareholders, the decision hinges on whether the certainty of the guaranteed financing outweighs the perceived lower valuation compared to the rival bid. Paramount remains steadfast in its pursuit, suggesting the battle for control of one of Hollywood's legacy studios is far from over.
