In a significant escalation of the corporate takeover battle, media giant Paramount Skydance has fortified its all-cash bid for Warner Bros. Discovery (WBD) by securing a massive personal financial guarantee from billionaire Larry Ellison. This strategic move directly addresses concerns previously raised by WBD's board regarding the solidity of the offer's financial backing.
Ellison's Unprecedented Financial Backing
Paramount Skydance announced that Oracle founder and its controlling shareholder, Larry Ellison, has provided an irrevocable personal guarantee of USD 40.4 billion. This guarantee covers the equity financing for the proposed acquisition and any potential damages claims against Paramount. The statement clarifies that this guarantee is a direct response to questions from WBD directors about the proposal's financial foundations.
The core offer remains unchanged: Paramount Skydance Corporation is proposing to acquire 100 per cent of WBD's outstanding shares at USD 30 per share in cash. Should the deal proceed, Paramount would assume complete control over all assets and liabilities of Warner Bros. Discovery, marking a full takeover.
The Boardroom Standoff and Netflix Rivalry
The conflict intensified after WBD, in its official Schedule 14D-9 filing, argued that the initial equity backstop from the Ellison family trust was insufficient. The trust holds a majority of Ellison's assets. WBD's board insisted that only a direct personal guarantee from Ellison himself would resolve their concerns.
Paramount has countered this stance, claiming that this specific demand was never raised during the 12 weeks of prior negotiations before WBD agreed to what Paramount describes as an "inferior transaction" with streaming rival Netflix. Paramount has also raised questions about the transparency of WBD's disclosures to its own shareholders.
Transparency and Shareholder Value at Core
Paramount argues that the WBD filing lacks critical details, preventing investors from making a proper comparison between the two competing offers. Key omissions highlighted by Paramount include the financial analysis used by the WBD board to select the Netflix offer and details on the valuation of the Global Networks stub equity, which Paramount values at USD 1 per share. Clarity on debt-related adjustments under the Netflix agreement is also reportedly missing.
This development underscores a high-stakes corporate drama centred on transparency and maximising value for WBD shareholders. By securing Ellison's colossal personal guarantee, Paramount Skydance has significantly strengthened its position, applying pressure on the WBD board to reconsider its agreement with Netflix and provide clearer justification to its investor base.
