The American president's son-in-law. A leading alternative-asset management firm. The chief executive's father who briefly controlled wealth surpassing Elon Musk's.
TL;DR
- Paramount launched an unsolicited takeover attempt for Warner Bros. Discovery Inc.
- The bid is backed by a consortium of financial institutions and wealthy individuals.
- Notable backers include Larry Ellison, Jared Kushner's Affinity Partners, and sovereign wealth funds.
- Paramount's offer aims to scuttle Netflix's prior agreement to acquire Warner Bros.
Paramount's Skydance Corp. Launched an unsolicited takeover attempt on Monday for Warner Bros. Discovery Inc., uniting a variety of financial institutions, wealthy individuals, and state-backed investment funds, all intending to scuttle Netflix Inc.'s agreement from the previous week.
Bank of America Corp., Citigroup Inc. And Apollo Global Management Inc. Are providing the debt commitment, according to filings. RedBird Capital Partners and Larry Ellison — at one point this year the world’s richest person — will backstop the $40.7 billion of equity which will in part be provided by Saudi Arabia’s Public Investment Fund, the Qatar Investment Authority, Abu Dhabi’s L’imad Holding Company PJSC and Jared Kushner’s Affinity Partners.
The names are notable as much for their size as well as their proximity to President Donald Trump, who even before Paramount went public with its bid warned of potential antitrust concerns around Netflix’s planned $72 billion acquisition of Warner Bros. Trump, speaking to reporters on Sunday, said he would be personally involved in the decision-making process that now includes a close family member and wealth funds in countries he’s courted to make investments in America. On Monday, he downplayed that involvement, saying neither Paramount nor Netflix were “great friends” of his. Play Video
In correspondence addressed to the Warner Bros. Board, Paramount's Chief Executive Officer, David Ellison, stated that the financial backers his company had secured, who consented to relinquish oversight privileges, ought to bolster confidence in their capacity to finalize the acquisition.
“We are providing you with funds certain from one of the wealthiest families in the world, a domestic counterparty, while also eliminating any cross-conditionality, which should give WBD’s board complete comfort and certainty as to our ability to close in a timely fashion,” he wrote.
This recent funding arrangement comes after extended discussions and revised offers, during which Paramount aimed to persuade Warner Bros. In total, Paramount presented six proposals across a three-month period. According to the documentation, Ellison visited the Beverly Hills residence of Warner Bros. Chief Executive Officer David Zaslav on one occasion.
The iteration now on the table, submitted Dec. 4, includes a $54 billion so-called bridge loan split equally between Bank of America, Citigroup and Apollo. For the equity portion, the entirety will be guaranteed by the Ellison family and New York investment firm RedBird in “a radical simplification” of a previous plan after the Warner Bros. Board expressed concerns, according to the filing.
Larry Ellison, an 81-year-old who is David's father and the originator of Oracle Corp., and who considers Trump a confidant, momentarily held the title of the planet's wealthiest individual in September. This occurred after his net worth experienced an unparalleled surge of $89 billion within a single day, as reported by The Bloomberg Billionaires Index. Since that time, Oracle's stock has declined, and his wealth now stands at $277 billion, according to the same financial index.
His trust “has financial resources well in excess of what would be required to meet its commitments,” according to Paramount’s filing, citing 1.16 billion shares of Oracle worth about $252 billion. As of September he had already pledged about one-quarter of those as collateral against personal debt, according to the index.
Paramount had also launched other attacks on Warner Bros.: The roster of financial backers now omits China’s Tencent Holdings Ltd. — which a prior plan indicated would contribute $1 billion — subsequent to the Warner Bros. Board expressing doubts regarding the participation of an additional non-US equity funding entity.
The proposal from December 1st also outlined a $11.8 billion pledge from The Ellison family, a total of $24 billion from three sovereign wealth funds located in the Gulf, and contributions from RedBird and Affinity Partners. It remained uncertain from the filings submitted on Monday if these financial commitments had been altered.
Kushner, PIF
The offer from Paramount signifies the second instance this year where Saudi Arabia’s Public Investment Fund has collaborated with Kushner on a notable transaction. Affinity Partners was a component of the group that consented to acquire Electronic Arts Inc. Back in September through a $55 billion exchange. Kushner facilitated the initial link between the video game developer and PIF, and for an extended period served as a key individual in the discussions, as reported by Bloomberg at that juncture.
Alongside the Qatar Investment Authority, a less experienced entity is entering the fray — L’imad. This firm, entirely controlled by The Abu Dhabi administration, has completed just publicly disclosed a single significant transaction: In late October, it consented to acquire a majority interest in Modon Holding PSC, a real estate developer based in the UAE with a market capitalization of $15 billion.
Paramount stated that the Public Investment Fund (PIF), Affinity Partners, L'imad, and Qatar Investment Authority (QIA) have consented to relinquish any oversight authority or positions on the board, a move that would prevent potential examination by the US Committee on Foreign Investment in the United States.
Credit Ratings
Paramount’s bid at $30 a share in cash comes after Netflix agreed to buy Warner Bros. For $27.75 in cash and stock in a deal backed by $59 billion of unsecured financing from Wells Fargo & Co., BNP Paribas SA and HSBC Plc. Paramount’s bid is for the entirety of Warner Bros., while Netflix is only interested in the Hollywood studios and streaming business. Warner Bros. Announced plans in June to split into two separate publicly traded companies by mid 2026.
Paramount's financing arrangement, backed by certain of its holdings, was structured to help the merged entity achieve an investment-grade credit assessment, as stated by individuals privy to the situation who requested anonymity when discussing confidential details. Currently, S&P Global Ratings assigns Paramount a BB+ rating, a notch below investment grade, while Fitch Ratings classifies it as BBB-, bordering on speculative grade.
During a call on Monday, Paramount's interim Chief Financial Officer, Andrew Warren, stated that the company anticipates credit rating agencies will classify the debt as investment grade, contingent upon deleveraging strategies implemented within approximately two years after the acquisition's finalization. Chief Operating Officer Andy Gordon mentioned that approximately $17 billion of the $54 billion debt commitment is earmarked for the repayment and extension of a current bridge loan held by Warner Bros.
