Larry Ellison backs Warner Bros. bid with $40 billion

On Monday, Paramount Skydance revealed that Larry Ellison, the billionaire co-founder of Oracle, is providing personal backing for the company's attempt to acquire Warner Bros. Discovery, committing over $40 billion in support of the hostile takeover. This major move significantly escalates the ongoing bidding war with Netflix over the media conglomerate.

Details of the Bid

Larry Ellison, one of the world's wealthiest individuals, is also the father of Paramount's CEO, David Ellison. Paramount has been pursuing a complete acquisition of Warner Bros. Discovery, making a direct offer to the company's shareholders after their initial proposal was rejected by Warner's board in favor of a Netflix bid. Netflixs offer was limited to Warner's studio and streaming units.

In addition to focusing on Warner's studio and streaming segments, Netflix's bid also includes plans to separate Warner's TV assets, such as CNN and TNT, into a distinct entity. Paramount, however, has argued that acquiring the entirety of Warner Bros. Discovery would provide greater value for its shareholders. Despite this, Warners board has urged its investors to reject the proposal, expressing concerns about the financing of the deal and whether the Ellison family could secure the necessary funds.

Larry Ellison's Personal Commitment

To address these concerns, Paramount adjusted its offer on Monday. The company announced that Larry Ellison would personally provide an irrevocable guarantee of $40.4 billion for the equity financing of the bid, covering any potential damages claims related to the deal. Paramount emphasized this move to reassure Warner Bros. Discovery shareholders that the offer is financially secure.

In a statement, Paramount encouraged Warner Bros. Discovery's shareholders to express their preference for the superior bid by tendering their shares. "We urge WBD shareholders to support Paramount's proposal," the statement read.

The Financial Offer

Paramounts offer is an all-cash bid of $30 per share, surpassing Netflixs bid of $27.75 per share. Despite the higher offer, Paramounts bid mirrors the original price it proposed in its formal offer for Warner Bros. Discovery, which was also $30 per share.

Political Influence

The bidding process has also drawn the attention of former U.S. President Donald Trump, a vocal critic of CNN. Trump reportedly supports changes to the cable news network, and his relationship with the Ellison family has remained strong. Earlier this month, Trump commented on Netflixs potential acquisition of Warner Bros., suggesting it would greatly enhance the streaming service's market share. "When they have Warner Brothers, you know, that share goes up a lot," Trump said. He also hinted at his potential involvement in decisions regarding regulatory approval for the deal.

Stock Market Reactions

Following the announcement of Paramount's bid, the companys stock saw a significant increase, rising by more than 7% during early trading on Monday. In contrast, Netflixs stock experienced a slight dip of about 1%, while Warner Bros. Discoverys stock rose by approximately 3%.

Conclusion

The battle for Warner Bros. Discovery is far from resolved, with both Paramount and Netflix continuing to make aggressive moves in the ongoing bidding war. As the Ellison family deepens its involvement, the future of Warner Bros. Discovery remains uncertain. Experts suggest that the outcome of this acquisition attempt could have broad implications for the media industry as a whole.