Oracle co-founder offers US$40.4 billion guarantee in Paramount’s offer to Warner

Oracle co-founder Larry Ellison has decided to personally enter the race for Warner Bros. Discovery. He will offer a stand-alone guarantee of $40.4 billion in equity financing to support the $108.4 billion, all-cash purchase proposal presented by Paramount Skydance. 📱Download the g1 app to see news in real time and for free The information is contained in a regulatory document released this Monday (22). And, in practice, the guarantee works as a formal commitment from Ellison to cover any failures in the business’s financing. This is because, by using his own assets as support, the entrepreneur seeks to provide more security to the operation and eliminate the risk that the purchase will not have sufficient resources to be completed. See the videos that are trending on g1 👉 The movement directly targets one of the Warner board’s main concerns: the financial solidity of Paramount’s proposal and the absence, until then, of broader involvement by the Ellison family in the business. 👉 Larry Ellison, co-founder of Oracle, is a key player in the dispute for Warner because he finances Skydance, linked to Paramount. Although he does not participate in the management of Paramount, his personal support strengthens the position vis-à-vis Netflix. These points were weighing against the offer and helped to strengthen the company’s preference for an alternative presented by Netflix. Larry Ellison, founder of Oracle. Oracle PR via Hartmann Studios Despite the reinforcement in financing, Paramount stated that the terms offered to Warner shareholders remain unchanged. The proposal continues to provide for the payment of US$30 per share, entirely in cash — a higher value than that offered by Netflix per share, although supported by a more complex financial structure. When contacted by Reuters, Warner Bros and Netflix did not comment on the new movement. Warner Board Resists Paramount Days before Ellison’s guarantee was released, Warner Bros. board resisted Paramount. Discovery had formally recommended that its shareholders reject Paramount’s proposal. The board classified the offer as inferior to the merger already agreed with Netflix, reinforcing its preference for the agreement with the streaming giant. In the council’s assessment, Netflix’s proposal presents fewer uncertainties. The agreement, considered binding, combines payment mostly in cash with debt commitments already defined, without the need to raise new resources in the market. This reduces the risk that the transaction will face financial obstacles along the way. Furthermore, Warner’s management highlighted that the partnership with Netflix would expand the global reach of its content and bring long-term gains, both for consumers and the creative community linked to the studios. Netflix and Warner Bros. Reuters Netflix announces deal The deal announced by Netflix evaluates Warner Bros. Discovery at around US$82.7 billion. Of this total, approximately US$72 billion would be paid directly to shareholders, while the remainder corresponds to the assumption of the company’s debts. If completed, the operation would allow Netflix to reduce its dependence on external studios, strengthen its own production and accelerate its expansion into new business fronts, such as games, live events and additional consumer services. Another point that drew attention in the market was the commitment, included in the proposal, to keep Warner film releases in theaters — a relevant change for a company that historically prioritizes streaming to the detriment of theaters. Paramount’s offensive Paramount’s entry into the dispute occurred a few days after the announcement of the agreement between Warner and Netflix. The company presented an offer considered hostile, trying to take control of Warner despite the board’s recommendation to the contrary. Although the value per share offered by Paramount is higher, the total transaction package — which includes the purchase and assumption of debt — amounts to US$108.4 billion, requiring a more robust financing structure. It was precisely at this point that doubts arose from the market and Warner’s own management. Larry Ellison’s personal guarantee appears as an attempt to address these concerns. Under the revised terms, the businessman also committed not to withdraw resources from the family fund or transfer his assets while the transaction is under analysis, which seeks to avoid any additional fragility during the process. “Streaming war” The battle for Warner Bros. Discovery goes beyond financial value. Whoever wins the dispute will control one of the most valuable catalogs in Hollywood, which includes cinema classics, successful franchises and HBO productions, in addition to the HBO Max service. In an increasingly competitive market, in which content is the main differentiator for attracting and retaining subscribers, this collection represents a relevant strategic advantage in the so-called “streaming war”. Market analysts assess that Paramount still faces financial weaknesses and is trying, with increased financing, to avoid being left out of this sector consolidation. While Ellison’s assurance is seen as an important step forward, questions remain about whether it will be enough to convince Warner’s board to change its position. Warner Bros. logo at the Cannes Lions International Festival of Creativity in Cannes REUTERS/Eric Gaillard/File Photo *With information from Reuters news agency

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