Larry Ellison Makes ‘Irrevocable Personal Guarantee’ of $40.4 Billion Towards Paramount’s WBD Bid

Oracle co-founder Larry Ellison has agreed to provide an “irrevocable personal guarantee” of $40.4 billion of the equity financing for Paramount’s $108.4 billion bid for Warner Bros Discovery and any damages claims against Paramount. 

Ellison has also agreed not to revoke the family trust or “adversely transfer” its assets while a transaction is pending. Additionally, Paramount will publish records to confirm the that the Ellison family trust owns approximately 1.16 billion shares of Oracle common stock, as well as all of its material liabilities.

It also raised its breakup fee from $5 billion to $5.8 billion in the event the deal doesn’t secure regulatory approval and offered improved flexibility for WBD on “debt refinancing transactions, representations and interim operating covenants.”

The amended offer is condition among other things, on WBD continuing to own 100% of its global networks business. All other terms and conditions of the offer remain unchanged.

“Paramount has repeatedly demonstrated its commitment to acquiring WBD. Our $30 per share, fully financed all-cash offer was on December 4th , and continues to be, the superior option to maximize value for WBD shareholders,” Paramount CEO David Ellison said in a new letter on Monday. “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.”

A spokesperson for Warner Bros. Discovery did not immediately return TheWrap’s request for comment on the amended offer.

The amended offer comes after WBD’s board rejected its all-cash, $30 per share bid, calling it “inadequate” and “illusory.”

Among the board’s concerns were that the Ellison family has “consistently misled” WBD shareholders that the $40.7 billion of equity financing in its proposed transaction is fully backstopped by the Ellison family. At the time, they argued that the revocable trust is “no replacement for a secured commitment by a controlling stockholder” and that its assets and liabilities are “not publicly disclosed and are subject to change.”

In its new letter, Paramount said that none of the board’s concerns, nor a demand for a personal guarantee, were raised by WBD or its advisors over the 12 weeks that it submitted six bids for the entire company. After launching a strategic review of alternatives that included bids from Paramount, Netflix and Comcast, the board ultimately opted for an $82.7 billion deal with Netflix for Warner’s studio and streaming assets.

It also argued that the board’s response omits the financial analyses that were relied upon in selecting Netflix’s offer and any view to the value of the global networks business’ stub equity. Paramount values global networks at $1 per share, while analysts have pegged the value between $3 and $5 per share.

Additionally, Paramount said there is no disclosure regarding how Netflix calculates the dollar-for-dollar adjustment to proceeds that will be received by WBD shareholders based upon the net debt of the streaming & studios business.

“WBD shareholders should have such information so that they can assess how the actual Netflix package compares to Paramount’s offer, particularly while WBD principals and advisors refer to a “risk adjusted” value for Paramount’s
 100% cash offer and the $30 per share it presents to WBD shareholders,” the letter continued. “WBD’s disclosure likewise omits any detail about the nature and magnitude of that ‘risk adjustment’.” 

In addition to the amended offer, Paramount has extended the deadlinefor its tender offer to 5 p.m. ET on Jan. 21.

Additionally, Paramount said that 397,252 shares had been validly tendered and not withdrawn from the tender offer as of 6 p.m. ET on Dec. 19. Without board approval, Paramount would need at least 90% of WBD’s outstanding shares for its tender offer to be successful.

Shares of Paramount popped 2.98% in pre-market trading on Monday, while WBD shares popped 3.82%.

More to come…

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