Paramount Skydance’s (PSKY) $30 per share bid for Warner Bros. Discovery (WBD), which now includes a personal equity financing guarantee of $40.4B from Larry Ellison, is still not good enough for Harris Associates, the fifth-largest shareholder with a nearly 4% stake in the HBO owner.
“The changes in Paramount’s new offer were necessary, but not sufficient,” Alex Fitch, the portfolio manager and director of U.S. research at the investing firm, told Reuters in an email. “We see the two deals as a toss-up, and there is a cost to changing paths. If Paramount is serious about winning, they’re going to need to provide a greater incentive.”
The investor had said last week that they would welcome an increased bid from the David Ellison-led media company.
Along with the Oracle founder’s personal guarantee, Paramount on Monday raised its termination fee and has agreed not to revoke the Ellison family trust or transfer its assets while the transaction is pending but did not budge from the $30 per share offer.
The company also extended the tender offer deadline for Warner Bros. shareholders to January 21, from January 8. As of December 19, only about 400,000 WBD shares have been tendered, and Warner Bros. has 2,479,486,688 shares of common stock outstanding, as per its latest filing. A source told Bloomberg last week that bidders have been using a 2.59B share total.
Netflix (NFLX) is currently the front-runner to buy the streaming and studio assets of Warner Bros. in a $72B deal, excluding debt. The streaming giant has reworked a portion of the $59B bridge financing, which will be used for the deal, by securing a $5B credit line and two $10B delayed-draw loans, leaving $34B for syndication.