Paramount Skydance Corp has enlisted the full financial firepower of billionaire Larry Ellison in an effort to convince Warner Bros Discovery to overturn the rejection of its US$77.9 billion (A$117.8 billion) takeover bid.
Paramount Skydance agreed to the target company’s demands that the Oracle founder personally guarantee the $30 per share offer, which exceeds the $27.75 per share cash and stock rival bid from Netflix for the film, television and streaming assets.
Ellison has agreed to provide an irrevocable personal guarantee of $40.4 billion of the equity financing for the offer and any damages claims against Paramount and not to revoke the Ellison family trust or adversely transfer its assets during the transaction.
Paramount said it obtained the guarantee because Warner Bros claimed the “full equity backstop” from the trust, which holds most of Ellison’s assets, was inadequate, claiming it was not raised before the “inferior” transaction with Netflix was accepted.
“We expect the board of directors of (Warner Bros) to take the necessary steps to secure this value-enhancing transaction and preserve and strengthen an iconic Hollywood treasure for the future," Paramount CEO David Ellison said in a media release.
The bid has been extended to 21 January from 8 January.
Ellison’s father Larry, has a reported net worth of $247 billion, making him the third-wealthiest person in the world.
Before the offers came in, Warner Bros announced it would split into two companies with one owning its studios and streaming businesses, including Warner Bros and the other holding the global networks businesses like CNN.
A buy-out would continue the consolidation of the media and entertainment industry after the $84 billion merger of Skydance Media and Paramount Global.
Warner Bros Discovery (NASDAQ: WBD) shares closed at 98 cents (3.53%) higher at $28.75 on Monday (Tuesday AEDT), capitalising the company $71.25 billion, while Paramount Skydance (NASDAQ: PSKY) ended 56 cents (4.29%) higher at $13.61, valuing it at $14.59 billion.
