Paramount Skydance has lined up nearly $24 billion in new financing for its bid for Warner Bros. Discovery, with three Middle Eastern sovereign wealth funds expected to provide a major portion of the funding.
According to The Wall Street Journal, Saudi Arabia’s Public Investment Fund, the Qatar Investment Authority, and Abu Dhabi’s L’imad Holding Co. are expected to provide equity commitments totaling just under $24 billion. Saudi Arabia’s fund is expected to contribute roughly $10 billion, making it the largest single outside investor in Paramount’s effort to acquire Warner Bros. Discovery.
Paramount is also set to secure another $54 billion in debt financing from Bank of America, Citigroup, and Apollo Global Management, creating the capital structure needed to move the deal toward closing, which executives hope could happen as early as late July.
The new backing arrives after months of questions about whether Paramount could raise enough outside money to outbid Netflix for Warner Bros. Discovery. Earlier in the process, Warner had agreed to sell its studio and streaming operations to Netflix.
Paramount then launched a competing offer for the entire company, eventually increasing its bid to $31 per share and convincing Warner’s board to switch sides.
Netflix ultimately chose not to raise its offer. “We said all along this opportunity was a nice-to-have at the right price, not a must-have at any price,” Netflix CFO Spencer Neumann said after the company walked away from the bidding war. Netflix later received a $2.8 billion breakup fee when Warner terminated the agreement in favor of Paramount.
The latest financing arrangement also clarifies which investors remain involved in the deal. Earlier versions of Paramount’s proposal included support from Tencent and Affinity Partners, the investment firm founded by Jared Kushner. Neither company is expected to participate in the final financing package.
Tencent had briefly returned to discussions earlier this year, but people familiar with the deal now say it is no longer part of the investor group.
Paramount has maintained that the Gulf investors will not receive voting rights or board representation in the combined company. Because each fund would own less than 25% of the merged business, executives do not expect the investment to trigger a mandatory review by the Committee on Foreign Investment in the United States or the FCC.
Even so, the foreign financing has already become one of the most closely watched aspects of the transaction. Several lawmakers have urged regulators to take a closer look at the involvement of overseas investors in a company that would control assets including HBO, CNN, Warner Bros., and CBS.
