Paramount Stock Rallies After Amended Warner Offer. The Ellisons Are All-In on the Deal.

Paramount Skydance altered its offer to buy Warner Bros. Discovery on Monday. (Mario Tama/Getty Images)

Key Points

• Paramount Skydance revised its offer for Warner Bros. Discovery, with Larry Ellison personally guaranteeing $40.4 billion in equity financing.
• Paramount’s offer remains $30 per share, while Netflix’s competing bid is $27.75 in stock and cash for Warner’s assets.
• Paramount extended its tender offer to January 21 and increased the regulatory breakup fee to $5.8 billion, matching Netflix.

Paramount Skydance amended its offer for Warner Bros. Discovery on Monday, guaranteeing the backing of Oracle founder Larry Ellison following the rejection last week of its hostile bid.

Paramount said in a news release that it wouldn’t be raising its offer of $30 a share for all of Warner Discovery. But Ellison—whose son David Ellison is Paramount’s CEO—will now be providing an irrevocable personal guarantee of $40.4 billion of the equity financing for the offer and any damages claims against Paramount.

“Our $30 per share, fully financed all-cash offer was on Dec. 4, and continues to be, the superior option to maximize value for WBD shareholders… We expect the board of directors of WBD to take the necessary steps to secure this value-enhancing transaction and preserve and strengthen an iconic Hollywood treasure for the future,” David Ellison said.

Warner and Netflix didn’t immediately respond to a request for comment from Barron’s about Paramount’s revised bid.

Paramount stock jumped 4.3% to $13.61 on Monday. Warner rose 3.5% to $28.75. Netflix slipped 1.2% to $93.23.

Created with Highcharts 9.0.1Source: FactSetAs of Dec. 24, 3:45 p.m. ET

Created with Highcharts 9.0.1NetflixWarner DiscoveryParamount SkydanceDec. 12Dec. 24-10.0-7.5-5.0-2.502.55.0%

The moves suggest that investors think Paramount’s amended offer will boost its odds of getting the deal done. Warner is a must-have for the entertainment company. Without the HBO Max platform, and the rights to characters like Harry Potter and Batman, it would struggle to compete with Netflix and Walt Disney in streaming.

Warner stock may have been lifted by the prospect of a bidding war between Paramount and Netflix, while the move in Netflix was muted because investors have decided that Warner isn’t a must-have for the streamer. Some shareholders are probably hoping Netflix loses out to Paramount, given there are concerns that it may be overpaying for a company that has thus far struggled to grow streaming revenue.

Warner’s board told shareholders to reject Paramount’s bid last week, citing concerns that the Ellisons weren’t fully backstopping the financing. The board instead recommended that shareholders back Netflix’s offer of $27.75 in stock and cash for Warner’s streaming and studios assets.

In line with the amended offer, Paramount extended the expiration date of the tender offer to Jan. 21. It also raised the fee it will pay if regulators will block the deal to $5.8 billion from $5 billion, matching Netflix’s offer.

Financing has become a key battleground in the fight to own Warner, particularly after the board’s emphatic rejection of Paramount’s offer last week.

Netflix said in a filing on Monday that it had secured up to $25 billion in financing for the deal. The streamer has entered into a $5 billion unsecured revolving credit facility and two $10 billion senior unsecured delayed-draw term loan facilities, consisting of a two-year facility and a three-year facility.

The facilities will replace a previously disclosed bridge commitment. Bridge loans are short-term, high-interest loan used to provide immediate cash when a company is making a buyout bid.

Write to George Glover at george.glover@dowjones.com