Larry Ellison offers $40bn in bid to revive Paramount’s Warner Bros takeover

The billionaire founder of Oracle has agreed to provide a personal guarantee of $40bn (£31bn) in an effort to revive Paramount’s hostile takeover bid for Warner Bros.

Larry Ellison, an ally of Donald Trump and one of the world’s richest men, said he would provide an “irrevocable personal guarantee” for the entire equity of Paramount’s $108bn offer.

Paramount, led by Mr Ellison’s son, David, is attempting to disrupt Netflix’s agreed takeover of Warner Bros. Discovery (WBD), which owns film franchises such as Harry Potter.

However, the Hollywood giant rejected Paramount’s $30-per-share offer last week, saying the company had “constantly misled” shareholders about the structure of its bid.

The board of Warner Bros cited concerns that the offer, backed by three Gulf states, was guaranteed by the Ellison family trust rather than by Mr Ellison himself. It described the trust as “unknown and opaque”.

In addition to pledging a personal guarantee, Paramount confirmed that the Ellison trust owned 1.16 billion Oracle shares, worth roughly $228bn.

In a revised proposal published on Monday, the company also agreed not to revoke the trust or “adversely transfer” any of its assets during the sale process.

David Ellison, chairman and chief executive of Paramount, said: “Paramount has repeatedly demonstrated its commitment to acquiring WBD. Our $30-per-share, fully financed, all-cash offer was on Dec 4 and continues to be the superior option to maximise value for WBD shareholders.

“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.”

Warner Bros. has been plunged into a fiercely competitive bidding war after agreeing to an $83bn takeover by Netflix earlier this month. Under the terms of the deal, Warner Bros. will first spin off its traditional networks division, which includes CNN.

The takeover is expected to face a lengthy regulatory scrutiny, given that it will combine two of the largest streaming services in the US – Netflix and HBO Max.

It has also raised concerns among cinemas and filmmakers that Netflix could release fewer films in cinemas, a claim the streaming giant has denied.

Nevertheless, Warner Bros. has insisted the Netflix deal is “superior”, saying it was backed by a public company with a market value of more than $400bn and an investment-grade balance sheet.

In a separate filing on Monday, Netflix said it had secured $25bn in financing from banks, including Wells Fargo, BNP Paribas and HSBC, to help fund its offer.

Paramount’s approach has itself come under scrutiny for its funding sources. Around $24bn of the equity funding will be provided by the sovereign wealth funds of Saudi Arabia, Abu Dhabi and Qatar.

The Ellison family is putting in $12bn, while RedBird Capital, the US private equity fund that mounted a takeover bid for The Telegraph and is Paramount’s second-largest shareholder, is also backing the bid.

The Chinese tech giant Tencent and Affinity Partners, the private equity firm led by Trump’s son-in-law Jared Kushner, were previously involved in the bid but have since pulled out.

While Paramount has not increased its $108bn offer, the company said it would raise the amount of money it would pay if the deal falls through from $5bn to $5.8bn, matching Netflix’s pledge.

Paramount reiterated that its offer was contingent on Warner Bros continuing to own its cable networks division. The bid deadline has been extended by two weeks to 5pm on Jan 21.

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