Larry Ellison and his family would be on the hook for $9.8 billion if Paramount Skydance Corp.’s deal to buy Warner Bros. Discovery Inc. falls apart.
Paramount, which is run by Larry’s son David Ellison, agreed to pay Warner Bros. shareholders a $7 billion termination fee if its deal to buy the entertainment giant collapses due to regulatory issues. In February, Paramount paid $2.8 billion to Netflix Inc. to get the streaming company to abandon its pursuit of Warner Bros.
While those fees have been reported, the specifics of who pays what are found deep in company fillings. The potential bill is facing renewed attention after Paramount agreed last week to postpone closing until next June or five days after the resolution of lawsuits seeking to block the proposed merger that were brought by 12 states and the Writers Guild of America. Paramount, already heavily in debt, wouldn’t be required to take on new borrowings to fund the fees.
If the Warner Bros. deal doesn’t go through, Larry Ellison and a family trust would reimburse Paramount for both the $7 billion termination fee and the $2.8 billion Netflix fee. Ellison agreed to pay Paramount that $9.8 billion total by purchasing new Class B shares of the company at $16.02 each. Paramount’s stock is trading at about $8 a share presently.
The $2.8 billion Netflix fee was paid in February with cash on hand and new borrowings by Paramount, according to a public filing. That amount will ultimately be covered by the $46.7 billion in new equity that is to come from the Ellisons and their partners, which include RedBird Capital Partners and three Middle Eastern sovereign wealth funds, if Paramount completes the Warner Bros. acquisition.
Starting on Oct. 1, Paramount will have to pay Warner Bros. shareholders “ticking” fees of roughly $650 million a quarter. If Paramount is ultimately successful in acquiring Paramount, those late fees will be covered by the Ellisons and their partners as well. If the deal doesn’t close, Paramount doesn’t owe the ticking fees. Warner Bros. would receive the $7 billion break-up fee instead.
Ellison, the co-founder of software giant Oracle Corp., backed David in his takeover of Paramount last year. He also agreed to personally guarantee the equity portion of the Warner Bros. acquisition in order for Paramount to win that deal. A spokesperson for Ellison didn’t respond to a request for comment.
Oracle shares, the main source of his wealth, have taken a hit this year over concerns about the company’s spending on data centers and the impact of artificial intelligence on its traditional software business. According to the Bloomberg Billionaires Index, his fortune has declined by 31% to $163 billion this year.
Don’t threaten me with a good time.
Good. And while they're at it, the $273b off-balance sheet debt they're trying to obfuscate
Keeping my fingers crossed.
News article:
Larry Ellison and his family would be on the hook for $9.8 billion if Paramount Skydance Corp.’s deal to buy Warner Bros. Discovery Inc. falls apart.
Paramount, which is run by Larry’s son David Ellison, agreed to pay Warner Bros. shareholders a $7 billion termination fee if its deal to buy the entertainment giant collapses due to regulatory issues. In February, Paramount paid $2.8 billion to Netflix Inc. to get the streaming company to abandon its pursuit of Warner Bros.
While those fees have been reported, the specifics of who pays what are found deep in company fillings. The potential bill is facing renewed attention after Paramount agreed last week to postpone closing until next June or five days after the resolution of lawsuits seeking to block the proposed merger that were brought by 12 states and the Writers Guild of America. Paramount, already heavily in debt, wouldn’t be required to take on new borrowings to fund the fees.
If the Warner Bros. deal doesn’t go through, Larry Ellison and a family trust would reimburse Paramount for both the $7 billion termination fee and the $2.8 billion Netflix fee. Ellison agreed to pay Paramount that $9.8 billion total by purchasing new Class B shares of the company at $16.02 each. Paramount’s stock is trading at about $8 a share presently.
The $2.8 billion Netflix fee was paid in February with cash on hand and new borrowings by Paramount, according to a public filing. That amount will ultimately be covered by the $46.7 billion in new equity that is to come from the Ellisons and their partners, which include RedBird Capital Partners and three Middle Eastern sovereign wealth funds, if Paramount completes the Warner Bros. acquisition.
Starting on Oct. 1, Paramount will have to pay Warner Bros. shareholders “ticking” fees of roughly $650 million a quarter. If Paramount is ultimately successful in acquiring Paramount, those late fees will be covered by the Ellisons and their partners as well. If the deal doesn’t close, Paramount doesn’t owe the ticking fees. Warner Bros. would receive the $7 billion break-up fee instead.
Ellison, the co-founder of software giant Oracle Corp., backed David in his takeover of Paramount last year. He also agreed to personally guarantee the equity portion of the Warner Bros. acquisition in order for Paramount to win that deal. A spokesperson for Ellison didn’t respond to a request for comment.
Oracle shares, the main source of his wealth, have taken a hit this year over concerns about the company’s spending on data centers and the impact of artificial intelligence on its traditional software business. According to the Bloomberg Billionaires Index, his fortune has declined by 31% to $163 billion this year.