Shares in Paramount Skydance (PSKY) and Warner Bros. Discovery (WBD) spiked Monday after Larry Ellison, the centibillionaire founder and executive chairman of Oracle (ORCL), agreed to personally backstop $40.4 billion in equity financing for Paramount’s proposed acquisition of Warner Bros.
Paramount stock rose over 4%, while Warner Bros. shares rose by over 3.5%.
In a securities filing Monday morning, Paramount Skydance — led by Larry Ellison’s son, David Ellison — said the elder Ellison had agreed to backstop the deal’s financing to assuage fears from Warner Bros. Discovery’s board. Last week, the board rejected Paramount’s offer in favor of Netflix’s (NFLX) bid, arguing in part that Paramount is too undercapitalized to be able to get an acquisition across the finish line.
Paramount’s announcement on Monday stated that the Ellison family trust owns approximately 1.16 billion shares of Oracle common stock and that Larry Ellison had agreed not to revoke the trust or “adversely transfer” assets while negotiations remain open.
“Paramount has repeatedly demonstrated its commitment to acquiring WBD. Our $30 per share, fully financed all-cash offer was on December 4th, and continues to be, the superior option to maximize value for WBD shareholders,” David Ellison said in Paramount’s press release.
“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,” he added.
Netflix stock fell over 1% Monday.
Warner Bros., led by media mogul David Zaslav, has become the target of a multi-round bidding war in recent weeks between Paramount and Netflix for the storied film studio and its collection of broadcast networks.
In Paramount’s previous proposal, which was rejected by WBD’s board, David Ellison’s company would acquire both Warner Bros. streaming and studios division and its linear networks division in a $30 per share, all-cash acquisition valued at $108.4 billion.
The Ellison family and Gerry Cardinale’s RedBird Capital would backstop “100% of our equity commitments,” or the $40.7 billion in equity required to push a deal through, while Jared Kushner’s investment firm Affinity Partners and a cohort of Middle Eastern sovereign wealth funds would also provide capital while agreeing to “forgo any governance rights.” Affinity later withdrew from the hostile takeover bid.