Faced with a $108bn bid backed by Oracle chair Larry Ellison, the directors of Warner Bros Discovery seem to have found themselves thinking of Elon Musk. The Tesla boss signed a merger agreement for social network Twitter in 2022, and then tried to walk away from it. Ellison is not Musk, but he could do a little more to prove it.
WBD on Tuesday shared its reasons for declining a $30-per-share offer from Paramount Skydance, the media conglomerate controlled by Ellison’s family. WBD is instead sticking by its endorsement of a deal with Netflix, which offers $27.75 in the form of cash and Netflix stock, as well as equity in a spin-off cable networks business worth perhaps a few bucks.
Its reasoning rests partly on the structure of the funding. Of the $41bn equity contribution, only $12bn comes from Ellison, and the rest from various Middle Eastern wealth funds. Ellison has offered to “backstop” the whole equity portion, but WBD protests at the entity he is using, a “revocable trust”. It wants Ellison to offer an airtight personal guarantee, as Musk did, not one issued by an “estate-planning vehicle with no transparency”.