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of great quality Warner Bros. is sweetening its hostile takeover bid for Discovery with an “irrevocable personal guarantee” from Larry Ellison, who is putting billions of dollars behind his son’s company to back the deal.
On Monday, Skydance-owned Paramount announced that Larry Ellison – founder of Oracle and father of Paramount CEO David Ellison – had agreed to personally finance the company’s $40.4 billion offering of equity financing as well as be responsible for any damage claims.
Paramount previously said the Ellison family trust would support a bid for Warners worth more than $40 billion. But Warner’s board criticized that decision last week, arguing that Paramount had “consistently misled” shareholders about the Ellison family’s support because “a revocable trust is no replacement for a secure commitment.”
Paramount hit back at that claim on Monday – saying that Larry Ellison owns the majority of the trust assets and that Warner had not previously asked for a personal guarantee. But nevertheless, the company said, it has “chose to address WBD’s ongoing concerns.”
In addition to doubling down on its support of Ellison, Paramount also said it would increase his payout if the deal is blocked by regulators. The company is now increasing the breakup fee to $5.8 billion – which is equal to Netflix has already tabled its proposed transaction.
The price of Paramount’s $30 per share offer remains otherwise unchanged. But the company is extending the deadline for shareholders to “tender” their shares, with the deadline now set for January 21.
“Paramount has repeatedly demonstrated its commitment to acquiring WBD,” Paramount CEO David Ellison said in a statement. He said his company’s offer remains “the better option to maximize value for WBD shareholders.”
Paramount’s all-cash bid for all of Warner’s assets — which includes networks like CNN and Discovery — is valued at $77.9 billion, not including debt. But Warner’s board has urged shareholders to support the cash-and-stock deal it struck with Netflix earlier this month, which would sell its studios and streaming business for $72 billion.
associated Press Media contacts at Warner and Netflix were contacted for further comment on Monday. In a letter to shareholders last week, Warner’s board said that while the terms of the Netflix merger were better, “PSKY’s offer is misleading.”
shares Paramount-Skydance shares jumped nearly 7% in morning trading Monday. Warner Bros. Discovery’s stock was up more than 2%, while Netflix slipped about 0.7%.