Paramount Skydance (PSKY) stock surged nearly 8% on Tuesday after the company filed an 8-K with the SEC confirming it has secured a massive equity financing package of up to $46.97 billion to support its planned acquisition of Warner Bros. Discovery (WBD).
The financing is led by affiliates of Larry Ellison’s Lawrence J. Ellison Revocable Trust and RedBird Capital Partners. Crucially, the package includes significant backing from Middle East sovereign wealth funds. Saudi Arabia’s Public Investment Fund (PIF), Abu Dhabi’s L’Imad 1st SPV 2 Exempt RSC, and Qatar’s QIA TMT Holding LLC were confirmed as equity participants, with the Gulf investors expected to contribute roughly $24 billion of the total. LionTree Investment Fund is also named as a new stakeholder.
To facilitate the deal, Paramount amended its certificate of incorporation to increase the number of authorized Class B Common shares from 5.5 billion to 7 billion. The new equity investors will receive non-voting Class B shares priced between $12.00 and $16.02 per share, based on the 20-day average trading price prior to closing. A previously planned rights offering was scrapped in favor of this equity syndication.
Existing Class B shareholders will receive warrants, with one warrant issued per share held. Each warrant allows the purchase of one additional Class B share at the same subscription price range and includes anti-dilution protections. These warrants are valid for 10 years, and Paramount plans to list them on Nasdaq.
The filing reaffirmed that the "Ellison Guarantee"—Larry Ellison’s personal backstop commitment for his son David Ellison’s deal—remains in full force, acting as a safety net if other equity commitments fall through. The deal also includes approximately $54 billion in debt commitments from institutions including Bank of America, Citigroup, and Apollo Global Management.
The merger itself is priced at $31 per share in cash for WBD, a substantial premium to WBD’s current price of $9.85. The transaction, valued at up to $111 billion including debt, is expected to close by the end of the third quarter of 2026. Paramount paid Netflix a $2.8 billion breakup fee after Netflix abandoned its earlier plan to acquire parts of WBD.
Analyst reactions were mixed. Guggenheim raised its price target for PSKY to $14 but maintained a Neutral rating. Wolfe Research kept an Underperform rating with a $10 target, citing potential future equity raises. MoffettNathanson downgraded WBD from Buy to Neutral following the merger announcement.
