Warner Bros. Discovery (WBD) wants Oracle founder and billionaire Larry Ellison to give a strong personal guarantee in signing that he is fully committed to the $77.9B bid, excluding debt, made for the HBO owner by his son, Paramount (PSKY) chief executive David Ellison, according to a report by The Wall Street Journal late on Wednesday.
The report said Warner Bros. claims it does not know if Paramount’s all-cash bid will close unless the Ellisons share more details about the family’s revocable trust or sign a deeper commitment.
At the crux of Warner’s decision to choose Netflix over Paramount is a belief that “the Ellisons wouldn’t be good for their money,” the WSJ report said.
In a detailed filing released on Wednesday, Warner deemed Netflix’s offer as “superior” and said the Ellisons’ equity is supported by “an unknown and opaque revocable trust” and cited “gaps, loopholes, and limitations” in the documents Paramount has so far provided.
Although Paramount has indicated that the $30 per share offer is not its final, the company isn’t likely to raise its bid immediately, if at all, sources told WSJ.
Instead, it is engaging with shareholders and gathering feedback on its tender offer about what it needs to do. David Ellison said Wednesday that he has been encouraged by the feedback received from Warner shareholders thus far and would continue to push forward.
The tender offer is currently set to expire on Jan. 8, though it could be delayed further, the report said.
Mario Gabelli, a Warner shareholder and a well-known investor, told WSJ that he is likely going to tender his shares into the Paramount deal, believing that it will be easier for them to get the deal done versus Netflix.
Another big Warner shareholder told WSJ that he is frustrated with Paramount’s response on Wednesday, saying that the company still hasn’t addressed Warner’s concerns in full and is making it harder for investors, including himself, to fight on the Ellisons’ behalf.