Larry Ellison, the world's third-richest person and chairman of Oracle, has formalized his financial support for Paramount Skydance's bid to acquire Warner Bros. Discovery. According to a document released Monday, the billionaire has provided a personal guarantee of up to $40,4 billion to secure the financing of the deal. This revelation comes after WBD's board of directors recently expressed doubts about the strength of Ellison's commitment to the transaction.
The initial offer was rejected
A few days before this announcement, the Warner Bros. Discovery board of directors rejected Paramount Skydance's offer, valued at $108,4 billion including debt. The directors specifically questioned the financing structure and preferred to consider a competing offer from Netflix. According to reports from Reuters and Bloomberg, Larry Ellison's level of personal involvement was one of the key issues in the deal.
An adjusted offer, but unchanged in substance.
The document released Monday specifies that Paramount Skydance modified several parameters of its offer to address the concerns of WBD's board, without, however, increasing the overall proposed amount. The objective remains the same: to allow a group with a market capitalization of approximately $14 billion to take control of a company valued nearly five times as much, at around $69 billion.
A financial arrangement of exceptional scale
To complete this acquisition, Paramount Skydance is relying on a particularly ambitious financing plan. The trust controlled by Larry Ellison, in partnership with the investment firm RedBird Capital Partners, is expected to provide approximately $40,7 billion. This contribution is supplemented by a massive $54 billion debt, structured with the assistance of Bank of America, Citi, and Apollo Global Management, according to information also reported by the Wall Street Journal.
Larry Ellison's strong financial position highlighted
To reassure stakeholders, Larry Ellison's trust included a document confirming its ownership of approximately 1,16 billion Oracle shares. Based on Friday's closing price, this stake represents an estimated value of nearly $223 billion, intended to demonstrate the Oracle founder's financial capacity to meet his commitments.
Concessions to get closer to WBD's requirements
Paramount Skydance also increased the break-up compensation it would pay Warner Bros. Discovery should the deal not be approved by antitrust authorities. This compensation was raised to $5,8 billion, an amount equivalent to that offered by Netflix in a comparable situation. Furthermore, the offer's validity period was extended from January 8 to January 21 to allow more time for negotiations.
Netflix offers a different and partial approach
Netflix's competing offer, valued at $82,7 billion including debt, differs significantly from Paramount Skydance's. It only covers a portion of Warner Bros. Discovery's assets and notably excludes the group's legacy channels, including CNN and Discovery. According to Bloomberg, this transaction would first involve spinning off these assets, which would then be consolidated into a new publicly traded entity called Discovery Global.
A strategic battle for the future of the media
This case demonstrates the intensification of consolidation in the global media and entertainment industry, against a backdrop of increased competition between traditional studios and streaming platforms. The coming weeks, marked by regulatory scrutiny and board decisions, will be crucial in determining whether Larry Ellison's financial commitment will be enough to bring Warner Bros. Discovery under Paramount Skydance's control, or whether Netflix will succeed in imposing its strategic vision.
