Key Points
- Paramount secured funding from Middle East investment groups to support its planned $110 billion acquisition of Warner Bros Discovery.
- The deal includes $45.7 billion in equity commitments and $54 billion in debt financing from major lenders.
- The transaction faces regulatory scrutiny despite strengthened financial backing.
Paramount on Tuesday confirmed numerous reports that said the company has accepted money from a number of Middle East-based public investment groups to fund its proposed acquisition of Warner Bros Discovery (WBD).
In a filing with the U.S. Securities and Exchange Commission, Paramount disclosed that Public Investment Fund, L’Imad and Qatar Investment Authority affiliate TMT Holding have committed to participate in an equity syndication supporting the transaction. Additional backing includes LionTree Investment Fund and affiliates of the Ellison family and RedBird Capital.
The company said the expanded investor base is expected to diversify its shareholder structure and create strategic and commercial opportunities, while enhancing long-term shareholder value. The deal carries an enterprise value of approximately $110 billion and an equity value of $81 billion, including $45.72 billion in total equity funding commitments. Of that, roughly $24 billion is tied to the newly disclosed sovereign wealth fund participation, including $10 billion from Saudi Arabia’s Public Investment Fund.
A key provision of the agreement includes a backstop guarantee from Larry Ellison, who has agreed to cover any funding shortfalls if syndication partners fail to meet their commitments. Paramount noted that these syndication arrangements do not relieve original equity investors of their obligations, reinforcing the deal’s financial structure.
The transaction is also supported by $54 billion in debt financing commitments from Bank of America, Citigroup and Apollo Global Management.
Paramount said it will issue free warrants to holders of its Class B shares, replacing a previously planned rights offering. The warrants will allow shareholders to purchase additional stock at a price expected to range between $12 and $16.02 per share and will trade separately on the Nasdaq. The company said the move provides more tangible value to shareholders, particularly given current trading levels below the previously proposed rights offering price.
The introduction of warrants helped lift shares of Paramount, which rose nearly 10 percent on Tuesday. The company also plans to increase its authorized share count from 5.5 billion to 7 billion to accommodate the new issuance.
Paramount emerged as the winner of an unusual battle for Warner Bros Discovery’s assets in February, months after the latter company agreed to sell parts of its company to Netflix. The deal involves acquiring all of Warner Bros Discovery, including cable networks like CNN, TBS, TNT, Tru TV, Cartoon Network, Animal Planet and Discovery Channel.
The deal is far from certain, with officials in California and other states launching investigations into the acquisition.
