Billionaire Ellison personally guaranteed Paramount $40 billion to buy Warner Bros.
Oracle founder agreed to act as a guarantor of the deal to allay the fears of WBD's board of directors
Larry Ellison, who ranks among the top 5 richest billionaires, has stepped up his support for the bid by Paramount Skydance - the company headed by his son David Ellison - to buy Warner Bros. Discovery. Ellison Sr. has pledged to personally guarantee $40.4 billion in equity financing for the potential deal. This could strengthen Paramount's position against a rival bid from Netflix and has already affected the quotes of all participants in the long and intense battle for WBD's media assets.
Details
Oracle founder Larry Ellison has agreed to provide an irrevocable personal guarantee for $40.4 billion in equity financing that Paramount Skydance, led by his son David, wants to use to buy Warner Bros. Discovery, Bloomberg reports . In a document filed with the regulator, Paramount also indicated that the Ellison family trust owns about 1.16 billion shares of Oracle stock and that the billionaire has pledged not to revoke the trust or make an "adverse transfer" of its assets while discussions continue on the Warner Bros. deal.
Paramount is offering $30 per share for Warner Bros. Discovery, a total of about $108.4 billion including debt. Those terms trump the bid from Netflix, which has promised $27.75 per share or $82.7 billion for WBD's studio and streaming assets. Nevertheless, Warner Bros.' board of directors last week urged shareholders to reject Paramount's offer - precisely because it lacks sufficient financing guarantees and as a result carries "numerous and substantial risks," according to a statement.
The structure of financing through a family trust, from which assets can be withdrawn at any time, looked less attractive against the background of the already agreed deal with Netflix, points out Bloomberg. And the personal guarantee of a billionaire willing to invest his own fortune may force Warner Bros. to reconsider its decision, the agency believes.
How stocks are reacting
After Paramount Skydance's announcement, its shares rose by 4.3% in trading on Monday, December 22. Quotes Warner Bros. Discovery rose by 3.5%. Against this background, securities Netflix, which earlier agreed to buy part of the business Warner Bros., lost about 1.2%.
On Wall Street, the attitude to Paramount Skydance is cautious: 13 analysts out of 21 advise to keep the company's shares in the portfolio, follows from the data of MarketWatch. Five recommend selling them, and only three recommend buying them. The average target price is just 5% above the Dec. 22 closing level.
Netflix securities, on the contrary, are supported by the majority: 31 analysts out of 46 recommend buying them. Three analysts are bearish. The consensus target implies a growth potential of almost 40%.
Warner Bros. shares have no sell recommendations at all right now. 13 analysts suggest to keep them in the portfolio, and 11 - to increase the share. At the same time, Wall Street expects only about 5% growth of the company's quotations on the horizon of 12 months, the average target price shows.
This article was AI-translated and verified by a human editor
