How far would you go to help your son win a business deal? For Oracle founder Larry Ellison, the answer is $40.4 billion. That’s the massive personal guarantee he just put on the table to support his son David’s attempt to buy Warner Bros. Discovery through Paramount.
Think of it like co-signing for your kid’s car loan, except the car costs more than some countries make in a year. Larry’s guarantee covers the entire equity financing needed for this deal, plus any potential damages. This isn’t play money either – it’s real cash backing from one of America’s richest people.
The numbers are eye-popping. Paramount’s offer values Warner Bros. Discovery at $108.4 billion total, with $30 per share for stockholders. They’re competing against Netflix, which already won board approval for their $82.7 billion deal at $27.75 per share. It’s like a bidding war at the world’s most expensive auction.
Here’s where things get interesting. Warner Bros. Discovery’s board previously rejected Paramount’s offers three times, calling them unreliable. Their main worry? The financing came from a family trust that could theoretically be changed or revoked. Board members basically said, “We don’t trust your money source.”
Larry’s personal guarantee fixes that problem completely. You can’t get much more reliable than having a tech billionaire personally promise to pay. The family also increased their breakup fee from $5 billion to $5.8 billion, matching Netflix’s terms. For investors watching this unfold, recognizing market emotions and avoiding decisions driven by fear or euphoria becomes crucial when evaluating competing bids.
This move represents a hostile takeover strategy. Since the board won’t cooperate, Paramount is appealing directly to shareholders. They’re essentially saying, “Board members might not like us, but look at our better price and rock-solid financing.” Paramount extended the bid deadline to January 21 for Warner shareholders.
The Warner Bros. board isn’t backing down though. They’re telling shareholders to reject Paramount’s offer, calling it “inferior” despite the higher price. They prefer Netflix’s deal, citing that company’s stronger financial position. David Ellison argues this acquisition would serve as a catalyst for increased content production and theatrical releases.
Now shareholders must choose between Netflix’s approved deal and Paramount’s higher offer backed by Larry Ellison’s enormous personal guarantee. It’s corporate drama at its finest.
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