Gulf wealth funds in Paramount bid for Warner

• PIF, QIA and L’imad named as partners
• Kushner’s Affinity Partners also involved
• Paramount vies with Netflix for studio

Gulf sovereign investors are involved in a surprise bid by Paramount to acquire Warner Bros Discovery, the Hollywood studio behind the Harry Potter films, the DC Universe, Friends and Game of Thrones.

The US media conglomerate made the $108.4 billion offer directly to Warner Bros Discovery’s shareholders on Monday after the company, which also owns streaming giant HBO, announced it had accepted a different deal from Netflix on Friday.

Paramount is led through Skydance Corporation by David Ellison, son of Oracle co-founder and Donald Trump ally Larry Ellison.

In a news release, Paramount said equity from the Ellison family and US investment manager RedBird Capital would finance the proposed acquisition, in combination with debt pledged by Bank of America, Citi and Apollo Capital Management.

However, a disclosure to the US Securities and Exchange Commission names Saudi Arabia’s Public Investment Fund, the Qatar Investment Authority and Abu Dhabi-owned investor L’imad Holding Company as “other outside financing partners” alongside Affinity Partners, the business of Trump’s son-in-law Jared Kushner.

Affinity is in turn heavily backed by PIF and recently partnered with Saudi Arabia’s sovereign wealth fund to acquire US videogame developer Electronic Arts.

Paramount’s regulatory filing says these companies would make non-voting equity investments and forgo any representation on the board or other governance rights, to avoid tripping a review on national-security grounds by the Committee on Foreign Investment in the United States.

Equity unknown

Paramount did not disclose the amount of equity the Gulf sovereign funds have made available for Monday’s hostile bid. 

A previous bid – a private acquisition proposal that Paramount submitted to Warner Bros Discovery on December 1 – included $11.8 billion of commitments from the Ellisons and a combined $24 billion from the three Gulf funds, according to a separate disclosure that Paramount filed with the SEC.

PIF and QIA were contacted for comment. Contact details for L’imad were not immediately available.

The latest offer of $30 per share aims at the entirety of Warner Bros Discovery. Netflix’s $83 billion offer would cover only its streaming services plus television and movie studios, and would spin off CNN and other cable channels.

Further reading:

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• PIF to set out strategy for ‘all the way to 2040 and beyond’
• Qatar’s $526bn wealth fund bets big on technology

The hostile takeover attempt escalates weeks of heated back-and-forth over the fate of Warner Bros Discovery, which had received private offers from Paramount and Netflix as well as Comcast.

Trump said on Sunday that a Netflix-Warner deal “could be a problem” and might need to go through a government anti-trust review because of the streaming behemoth it would create.

In its release on Monday, Paramount said it had the “more compelling” proposal and high confidence that it can secure “expeditious regulatory clearance”.

The Warner Bros Discovery board of directors agreed to review Paramount’s latest offer “carefully” and return its recommendation to stockholders within 10 business days.

In a statement, it advised them to “take no action at this time” and said it has not yet changed its recommendation for the Netflix deal.