Larry Ellison puts $40 billion on line to back Paramount's hostile WBD bid

Paramount comes with a new guarantee deal to win the WBD bid against Netflix.

The company announced that Oracle co-founder Larry Ellison will personally guarantee the entire $40.4 billion in equity financially backing its $78 billion offer for Warner Bros.

The move is a direct response to the WBD board’s repeated skepticism about the firmness of Ellison’s commitment.

With this revised offer, the company seeks to counter WBD’s claims that Paramount’s financing was “illusionary.”

Beyond the unprecedented personal guarantee, which puts roughly a sixth of Ellison’s $250 billion net on the line, Paramount also agreed to publish trust records confirming the Ellison family trust holds 1.16 billion Oracle shares.

Moreover, Paramount also raised another reverse breakup fee to $5.8 billion, matching a similar provision in WBD’s agreed deal with Netflix.

Despite these constant efforts, it is important to note that Paramount didn’t make any increase in its offer i.e., $30 per share for the entire company, which it values at $108 billion.

Throughout the bid, WBD’s consistently favoured Netflix $27.75 per share bid for its studio and streaming assets, arguing that a subsequent spin-off of cable networks such as CNN will create greater total shareholder value.

WBD Chairman Samuel Di Piazza has previously expressed doubt that Ellison would be fully committed to closing, claiming, “Doing a deal is great; closing a deal is better.”

Paramount and its financial backers, including RedBird Capital’s Gerry Cardinale, are now tempting direct;y to WBD shareholders, stating their offer gives superior value and certainty.

It is expected that WBD will review its amended bit, though it is uncertain whether a new decision will be made or not.