Kushner’s Firm Withdraws from Paramount’s Warner Bros. Bid
Jared Kushner’s private equity firm, Affinity Partners, is stepping back from its role in Paramount Skydance’s aggressive move to take over Warner Bros. Discovery. This decision follows Warner Bros. Discovery’s board unanimously advising shareholders to reject Paramount’s $78 billion offer from the Ellison family.
Reports suggest that Affinity’s withdrawal occurred after Kushner’s ties to the deal—especially since his father-in-law, former President Trump, showed interest in the acquisition—led to unwanted attention. A source informed Bloomberg News about these developments.
Kushner’s company had invested $200 million in Paramount’s bid, which Bloomberg described as a relatively modest amount.
Affinity Partners issued a statement indicating that, given the competition for this unique American asset, they would no longer pursue the opportunity, while still expressing belief in Paramount’s strategic approach.
The board of Warner Bros. Discovery informed shareholders on Wednesday that rejecting Paramount’s offer in favor of Netflix’s was the best course of action.
Samuel A. Di Piazza, Jr., the board’s chairman, stated that after thorough evaluation, the board found Paramount’s tender offer inadequate, posing considerable risks and costs for shareholders.
This move by WBD’s board seems to open doors for Netflix to potentially acquire valuable assets, like HBO and the Warner Bros. movie studio.
Netflix’s proposal stands at a valuation of $82.7 billion, translating to $27.75 per share, whereas Paramount’s all-cash offer was set at $30 per share for WBD’s entire portfolio, which also includes struggling networks like CNN.
WBD’s CEO, David Zaslav, has long preferred the potential of a Netflix bid over Paramount’s, given concerns about Paramount’s financing, which involves a complex structure tied to Larry Ellison’s family assets.
Recent reports indicate that Paramount doesn’t have immediate plans to pursue a hostile takeover with a $30-per-share bid for WBD. Instead, they are attempting to convince shareholders that their $78 billion offer is superior to the arrangements made with WBD and Netflix.
David Ellison and Larry Ellison, in conjunction with Redbird Capital, are expected to inform shareholders that if enough investors buy in by the January 8 deadline, they’ll cover the $2.8 billion breakup fee linked to the Netflix agreement.
Despite rumors of an impending holiday bidding war, sources suggest that Paramount might not need to react hastily based on current investor responses.
Paramount maintains that its bid offers quicker and cleaner value than its deal with Netflix, which they argue could face regulatory hurdles and complicated financing issues.
Plans for funding are said to involve Bank of America, Apollo, Larry Ellison, and various Gulf state sovereign wealth funds.
Warner Bros. Discovery and Netflix counter that Paramount’s financing mechanism hinges on a revocable trust linked to Larry Ellison’s Oracle stock, which has seen significant valuation declines along with the overall tech market.
The board from WBD pointed out that the Ellison family hasn’t provided solid assurances to cover any funding challenges that might arise from the bid.
Netflix Co-CEO Ted Sarandos stated that the board has seen improvements, offering that the Netflix agreement is favorable and in the best interest of shareholders. He and co-CEO Greg Peters reassured WBD’s shareholders that they believe the Netflix deal will finalize within a year or so, pending regulatory approval, emphasizing it as the best outcome for various stakeholders in the entertainment industry.
