Gulf nations contributing $24 billion to Paramount’s WBD purchase
Gulf nations contributing $24 billion to Paramount’s WBD purchase
The Saudi Public Investment Fund will contribute $10 billion to the merger, but the contributions aren’t expected to cause regulatory issues.
It’s one thing for Paramount Skydance to convince Warner Bros. Discovery shareholders that its purchase offer was superior to Netflix’s. It’s another entirely to come up with the $81 billion needed to close the deal. But, as first reported by The Wall Street Journal, Paramount is getting some major help in financing the deal: a commitment of $24 billion from three Gulf states, led by Saudi Arabia.
Key Details:
- Pitching in: Three Gulf states are providing $24 billion in funding for the deal.
- In the lead: Saudi Arabia will contribute $10 billion from its Public Investment Fund.
- Below the threshold: The investments are not expected to trigger reviews by the FCC or other government organizations.
Abu Dhabi, Qatar, and Saudi Arabia will kick in a combined $24 billion to help finance Paramount’s purchase of Warner Bros. Discovery. They join Paramount CEO David Ellison and his billionaire father Larry Ellison, as well as RedBird Capital Partners, in backing the merger.
The Saudi Public Investment Fund will contribute $10 billion of that $24 billion, which will no doubt cause further consternation in Hollywood and Washington D.C. Many industry insiders have opposed Paramount’s takeover of WBD, and will likely point to numerous human rights violations that Saudi Arabia is accused of, as well as support by these countries for the U.S. and Israel’s war against Iran, as further reasons to resist the deal.
None of these Gulf investors will have voting rights in the combined Paramount-WBD. The Committee on Foreign Investment and the Federal Communications Commission won’t be forced to investigate, as none of the three entities will own 25% or more of the new company, but that does not mean that legislators and regulators won’t be involved. The deal still has to be approved by regulators in the United States and Europe; Paramount has told employees to expect that process to conclude this summer.
WBD initially accepted a takeover offer from Netflix, but Paramount persisted in its efforts to purchase the company. In February, WBD's board pivoted to recommending shareholders accept Paramount’s bid, after it sweetened its offer to $31 per share.
Shareholders of WBD will vote to accept the Paramount takeover at a special meeting set for April 23. Unless something shocking occurs, the vote will go Paramount’s way, and the company has lined up financing from Gulf states and other backers to make sure it has the cash to close the deal.
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