European Union regulators are investigating financing from Middle Eastern sovereign wealth funds for Paramount’s $111 billion bid to take over Warner Bros. Discovery.
Saudi Arabia’s Public Investment Fund, Qatar Investment Authority and Abu Dhabi Investment Authority are collectively providing nearly $24 billion to help finance the merger, according to Securities and Exchange Commission filings. For years, these funds have financed global buyout firms, including Apollo Global Management, which is among the groups financing the bid. The deal is structured to provide capital through non-voting equity investments, meaning they have no governance rights despite their 49.5 percent stake in the combined company.
Under the Foreign Aid Regulation, the Commission has the power to investigate financial contributions of at least €250 million granted by non-EU governments to companies operating in the region. The law aims to maintain competition when foreign investment comes in. If funding is found to be distorted, remedies can be imposed.
The committee set July 14 as a deadline to abandon the deal or open a full investigation into Paramount, which refused to comment.
The FCC is also reviewing foreign financing in the deal after the company petitioned for a waiver to allow investors to own roughly half of the combined company. The maximum foreign ownership in companies holding broadcast licenses is usually 25%.
On Wednesday, the merger was approved by regulators in Australia and New Zealand. They found the acquisition “is unlikely to have the effect of significantly reducing competition in relation to the wholesale supply of films for theatrical release in Australia,” Paramount said in its filing. While this would reduce competition, “the combined entity would still be tied to other film studios after the acquisition.”
So far, regulators in Saudi Arabia, Ukraine, Serbia and North Macedonia have found that the deal does not violate antitrust laws, Paramount Chief Legal Officer Makan Delrahim announced. The foreign direct investment authorities of Germany, Italy, France, Romania, Slovenia, Belgium, the Czech Republic and New Zealand also approved the merger.
He added: “Unnecessary delay will only help the tech monopolies that are trying to control the entertainment sector and protect their enormous market power at the expense of creative talent and consumers.”
