Larry Ellison, co-founder of Oracle, and his family fund are on the hook for $9.8 billion if Paramount Skydance's deal to acquire Warner Bros. Discovery falls through. This substantial liability stems from Ellison's personal guarantee of the equity financing for the acquisition, particularly in support of his son David Ellison, who leads Paramount. The $9.8 billion comprises two main components: a $7 billion breakup fee promised to Warner Bros. Discovery shareholders and a $2.8 billion payment previously made to Netflix to withdraw its own acquisition bid for Warner Bros.
The mechanism for Ellison's payment would involve him purchasing new Class B shares of Paramount at a price of $16.02 per share. This is notably higher than Paramount's current trading price, which is around $8 per share. The financial commitments have come under renewed scrutiny following Paramount's decision to delay the deal's closing until June of next year, or five days after the resolution of lawsuits filed by 12 U.S. states and the Writers Guild of America.
Adding to Paramount's potential costs, the company may also incur "ticking fees" to Warner Bros. shareholders if the merger isn't finalized by September 30th. These fees amount to approximately $650 million per quarter, or about $7 million daily, and could total over $1.9 billion if the deal extends to June 2027. While Paramount is already significantly leveraged, the company states it will not need to take on additional debt to cover these potential fees. Oracle's stock has faced pressure this year due to investor concerns over the company's substantial investments in data centers and the impact of AI, causing Ellison's net worth to drop by 31% to $163 billion according to the Bloomberg Billionaires Index.
