Key points
- Semafor says Musk is one of several names discussed
- Paramount declined to comment on the report
- Larry Ellison and his trust guarantee $45.72 billion in equity funding
- Paramount stock trades below the syndicate's $12 floor
Paramount Skydance (PSKY) executives have discussed asking Elon Musk to join a group of equity investors in the company, Semafor reported Wednesday, citing people familiar with the matter. Paramount shares were down 2.3% at $9.88 as of 3:12 p.m. Eastern time, against Tuesday's $10.11 close.
Musk is one of several wealthy individuals that CEO David Ellison has considered for the group, according to the report. Semafor said the size of any Musk investment could not be determined. A Paramount spokesperson declined to comment, and Musk did not respond to Semafor's request for comment.
How Paramount is paying for Warner Bros.
Paramount agreed in February to buy Warner Bros. Discovery (WBD) for $31 a share in cash. The companies valued the deal at $110 billion including debt, according to the merger announcement. The deal has not closed. WBD shares traded at $30.70 as of 3:12 p.m. Eastern time, just below the offer price.
On September 21, Paramount settled lawsuits from 12 state attorneys general and the Writers Guild of America that were the last major hurdles to the deal, NPR reported. The settlement with the states still needs a judge's approval.
Paramount is funding the purchase partly with new stock. In a July 31 filing, the company disclosed agreements for up to $46.7 billion of equity from affiliates of Larry Ellison's trust and $250 million from RedBird Capital Partners. Those investors have assigned their rights to a syndicate that includes their own affiliates. The other members are Saudi Arabia's Public Investment Fund, the Qatar Investment Authority, an Abu Dhabi sovereign fund, and LionTree. The Public Investment Fund also held $26 billion of SpaceX stock as of June 30, according to its 13F filing.
The filing says the syndicate's allocations cover the full equity commitment, and the original investors remain responsible for funding it. Larry Ellison and his trust also guarantee $45.72 billion of the equity funding, according to an April 7 filing. Semafor's report does not say whether Musk would join that syndicate or invest through a separate arrangement.
The syndicate will buy nonvoting Class B shares at a 20-trading-day average of daily volume-weighted prices, measured three business days before closing, with a ceiling of $16.02 and a floor of $12.00 a share. Paramount's $9.88 share price was below the syndicate's $12 minimum purchase price. That floor applies to the financing agreement, not to the stock's market price.
Musk and the Ellisons
Larry Ellison invested $1 billion in Musk's 2022 purchase of Twitter, now X, according to Semafor. He also invested in Tesla (TSLA) in 2018 and served on the company's board for years.
Paramount's April filing says the Ellison family and RedBird will retain all voting shares after that financing closes. Any terms for a Musk investment remain unknown.
Under the state settlement, Paramount agreed to create a board meant to insulate the combined company's CBS and CNN newsrooms from corporate intervention, according to NPR.
