Paramountlatest and best offer for Warner Bros. Discoverywhich was received with hostility today, includes funding from the Public Investment Fund (Kingdom of Saudi Arabia), PJSC L'imad Holding Company (Abu Dhabi), Qatar Investment Authority (Qatar) and Affinity Partners, the investment fund of President Donald Trump's son-in-law. Jared Kushner.
Abu Dhabi-headquartered Lunate and Qatar's sovereign wealth fund are major investors in Affinity. Kushner's firm is also part of the group that agreed to buy Electronic Arts for $55 billion.
Paramount earlier Monday announced a hostile takeover bid for WBDtaking his arguments directly to shareholders after he said the company, run by David Zaslav, rejected its repeated proposals (six in total). Instead, WBD signed the deal sell its studios and streaming assets to Netflix.
Warner says it will “carefully review and consider Paramount's proposal to Skydance,” but “the Board is not changing its recommendations regarding the agreement with Netflix. Warner Bros. “Discovery intends to communicate to its shareholders the Board's recommendation regarding the Paramount Skydance tender offer within 10 business days.”
Trump said last night that Netflix's dominance in streaming combined with HBO Max “could be a problem” and that he would be involved in evaluating any deal. The merger will likely be reviewed by the Justice Department.
Today, a series of SEC filings detailed the saga and revealed Paramount's backers in the Middle East in the final proposal filed last week. In response to WBD's concerns, Par said, the groups “agreed to waive any management rights, including representation on the board of directors, associated with their non-voting equity investments.
“Accordingly, the transaction will not be subject to the jurisdiction of CFIUS,” it said, referring to the Committee on Foreign Investment in the United States, an interagency body that reviews foreign investments for potential national security risks.
China's Tencent, which was part of the previous offer, was no longer a partner in the deal in its latest version.
“Paramount has addressed each material issue on which it has received specific feedback, despite never receiving any written response… to any of the transaction documents submitted,” Paramount said in a statement directly to WBD shareholders. He offers them $30 per share in cash to buy out the entire company. They have until January 8 to accept Paramount's offer, which may be extended.
Total cash financing from Paramount affiliates and partners, including RedBird Capital, is $40.7 billion. The deal also includes debt financing agreements with Bank of America, Citi and Apollo Capital Management totaling up to $54 billion.
Paramount notes that the $40 billion is fully backed by the Ellison Trust, meaning it can and will cover all financial obligations if necessary.
“Ellison Trust has financial resources significantly in excess of those that will be required to satisfy its obligations…including, among many other assets and financial resources available to it, the registered and beneficial ownership of approximately 1.16 billion shares of Oracle Corporation with a market value of approximately $252 billion as of the date of this Tender Offer.”
Ellison Trust played a similar role in Skydance's much smaller acquisition of Paramount.
There will be a call on Wall Street this morning that will be taken by the CEO of Paramount. David Ellison and chief strategy and operating officer Andy Gordon, one analyst noted passive supporters in the Middle East and asked: “Why are they investing so much without having control rights? Like, is there any rationale that you can provide?”
Ellison said they are doing this for the proceeds of the Paramount-WBD merger, which will be extremely “cash flow generating.”
“Obviously, it's incredibly attractive to all shareholders, and from that perspective, I think that's why our partners are obviously here. When you look at the bottom line, it's good for our business. Obviously, that's why we're so strongly advocating for it today… They're incredibly sophisticated investors. They'll look at it through the lens of all investors, and that's how they maximize value. And one of the things we always look at as the largest investor in this business is that we stand shoulder to shoulder.” with shareholders striving to maximize value for everyone involved in our company.”
Dominic Patten contributed to this report.
