Larry Ellison issues USD 40.4 billion "personal guarantee" as Paramount amends offer to Warner Bros Discovery

New York [US], December 23 : Paramount on Monday (local time) addressed the concerns put forward by Warner Bros Discovery over its acquisition, with Oracle founder Larry Ellison issuing an "irrevocable personal guarantee" of USD 40.4 billion in equity to finance the deal.

Paramount said that WBD had sought a personal guarantee from Ellison.

A statement by Paramount stated, "WBD asserted that the full equity backstop from the Ellison family trust, which was included in Paramount's December 4 proposal to WBD and the December 8 tender offer to WBD shareholders, was inadequate, despite the trust holding a majority of the assets of Larry Ellison, the founder of Oracle and controlling shareholder of Paramount. WBD went on to assert that the only fix would be a personal guarantee from Ellison."

The statement added that the demand for a personal guarantee was not raised by WBD during the 12 weeks leading up to WBD agreeing to a deal with Netflix.

"None of these concerns, nor the demand for a personal guarantee, were raised by WBD or its advisors to Paramount in the 12-week period leading up to WBD agreeing to the inferior transaction with Netflix, Inc.," Paramount said in its statement.

The statement by Paramount stated, "Paramount Skydance Corporation today has amended its USD 30 per share all-cash offer for Warner Bros. Discovery, Inc. to address WBD's stated concerns regarding Paramount's superior offer. Paramount continues to offer to purchase, for USD 30 per share in cash, 100 per cent of the outstanding shares of WBD, and therefore will assume all assets and liabilities of WBD."

While Paramount offered USD 30 per share for WBD, including CNN and the rest of its cable channels, Netflix had offered USD 27.75 per share for Warner Bros and HBO. However, as reported by CNN, Netflix and WBD believe plans to spin off the cable assets will increase those stations' overall value and the company's value relative to Paramount's deal.

Amending its offer to WBD shareholders, Paramount cited Larry Ellison's personal guarantee and stated that Ellison has agreed not to revoke the Ellison family trust or adversely transfer its assets during the transaction's pendency. Larry Ellison is the father of Paramount CEO David Ellison.

"Nonetheless, Paramount has elected to address WBD's current stated concerns, and has amended its offer to WBD shareholders as follows: Irrevocable Personal Guarantee: Larry Ellison has agreed to provide an irrevocable personal guarantee of USD 40.4 billion of the equity financing for the offer and any damages claims against Paramount. Revocable Trust: Ellison has agreed not to revoke the Ellison family trust (which has been operating for nearly 40 years as a counterparty to numerous transactions) or adversely transfer its assets during the pendency of the transaction," the statement read.

"Trust Assets: Paramount is publishing records confirming that the Ellison family trust owns approximately 1.16 billion shares of Oracle common stock and that all material liabilities of the Ellison family trust are publicly disclosed. Transaction Terms: In an effort to address WBD's amorphous need for 'flexibility' in interim operations, Paramount's revised proposed merger agreement offers further improved flexibility to WBD on debt refinancing transactions, representations and interim operating covenants," the statement added.

Paramount has also increased its regulatory reverse termination fee from USD 5 billion to USD 5.8 billion, matching the breakup fee promised by Netflix. Paramount has added up a condition on WBD to continue to own 100 per cent of its Global Networks business.

"Regulatory Termination Fee: To match the pending transaction, Paramount will increase its regulatory reverse termination fee from USD 5 billion to USD 5.8 billion. Conditions: The offer is conditioned, among other things, on WBD continuing to own 100 per cent of its Global Networks business. All other terms and conditions of the offer remain unchanged," Paramount said.

David Ellison, Chairman and CEO of Paramount, said, "Paramount has repeatedly demonstrated its commitment to acquiring WBD. Our USD 30 per share, fully financed all-cash offer was on December 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."

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