Paramount rolls out $44 billion bond sale to fund Warner Bros. takeover

Paramount Skydance Corp. has begun selling more than $44 billion of bonds in US dollars and euros to finance its acquisition of Warner Bros. Discovery Inc., launching the main portion of the year’s largest M&A financing, Bloomberg reported.

Bank of America Corp. and Citigroup Inc. are holding investor calls on Monday to discuss an offering of about $32 billion in investment-grade debt and the equivalent of $12.4 billion in junk bonds, according to people familiar with the matter quoted by Bloomberg. The sale is part of a $52 billion financing package that also includes $7.5 billion in loans, which lenders began marketing last week.

Paramount plans to offer eight tranches of US dollar-denominated investment-grade bonds with maturities ranging from two to 40 years, sources told Bloomberg.


The high-yield portion comprises two euro-denominated tranches maturing in five and eight years, along with three US dollar tranches due in five, eight and 10 years. Initial price discussions for the 10-year dollar notes point to a yield in the low-9% range, the people said.

The offering comes as Treasury yields climb to fresh multidecade highs. The US-Iran stalemate has driven oil prices higher and weighed on stocks and bonds amid concerns that elevated energy costs could fuel inflation and lead to further Federal Reserve rate increases. Most companies considering investment-grade bond offerings stayed on the sidelines on Monday.

Credit investors have been anticipating Paramount’s massive financing deal for months. The bond and loan sales were initially expected around the middle of the year, but the plans were delayed as the company addressed lawsuits filed by 12 state attorneys general and the Writers Guild trade union. Settlement agreements in both cases were reached last week, clearing the way for the financing to proceed, according to the Bloomberg report.

Because the debt was structured so that Paramount, not its lenders, would bear the cost of any increase in borrowing rates, the delay could prove expensive.

Paramount’s junk-bond offering is expected to surpass SoftBank Group Corp.’s recent sale as the largest corporate high-yield bond deal on record. The investment-grade portion would rank among the five biggest ever, according to data compiled by Bloomberg.

Paramount aims to price all the bonds and loans supporting the acquisition by Wednesday. If the $110 billion takeover is not completed before October, the company must pay Warner Bros. shareholders $7 million for each day of delay.

The acquisition, announced in February, followed a months-long bidding battle between Paramount and Netflix Inc. Warner Bros. shareholders approved the transaction in April, followed by clearance from the US Justice Department in June.

(Disclaimer: This article is based on inputs from agencies. These do not represent the views of The Economic Times)