The Information : WBD to Ellison: ‘Show Us the Money’

WBD to Ellison: ‘Show Us the Money’

How much can Larry Ellison really afford to spend helping his son buy Warner Bros. Discovery? That question seems to be at the heart of the WBD board’s rejection of the bid, made through David Ellison’s Paramount Skydance entertainment company. The elder Ellison has promised to backstop the $41 billion in equity financing needed for the $108 billion deal, but he hasn’t personally guaranteed the money, WBD notes in a securities filing.

Moreover, the company points out that there’s a lot unknown about Larry Ellison’s finances. Paramount has said the money would be coming from his trust, which has “financial resources well in excess of what would be required to meet its commitments.” That includes Ellison’s 41% stake in Oracle, which is worth more than $200 billion, Paramount said. (It probably doesn’t help that Oracle’s stock price keeps falling and is now down 46% since late September, amid worries about its AI commitments.)

WBD points out that the creditworthiness of Ellison’s trust “is not certain,” describing it as an “opaque entity whose assets, liabilities, beneficiaries, terms, conditions and limitations are not publicly disclosed.” WBD says it’s not even clear whether the trust owns the Oracle shares. WBD also points out that—as we’ve previously reported—Ellison has pledged about 30% of his stake as collateral for personal loans. One other issue: WBD notes that if any WBD shareholder sues the trust, its commitment to the financing “will automatically terminate.”

Ellison is rich, no doubt about it. But what’s he really willing to put at risk in this deal? We have yet to see.

The Information : OpenAI's Funding Advantage Over Rivals Grows

OpenAI's Funding Advantage Over Rivals Grows

Talk about an endorsement! For all the talk about OpenAI falling behind Google, the ChatGPT maker doesn’t seem to be having any problems attracting big backers. Last week it was Disney, putting in $1 billion, and soon it’s likely to be Amazon, judging from The Information’s scoop on Tuesday night that Amazon was in talks to invest more than $10 billion in OpenAI. On top of that, tonight we scooped the news that OpenAI is discussing with some investors raising as much as $100 billion.

All this means it will be harder for others on the front lines of AI development to keep up. Google, at least, has the resources to do so, given that it has a hugely profitable ad business and a money-making cloud business that’s directly benefiting from new AI services. Anthropic has the backing of Amazon and Google, and its business appears to be flourishing. The big questions hang over Meta or xAI, which are trying to compete with Google and OpenAI in AI models but without an obvious business model to earn a return on the development costs. (See here for more on xAI’s efforts to develop a business model.)

One possibility is that one of those companies folds. You can imagine a day in a couple of years when Meta gives up on developing its own AI models and decides to use Google’s, say, or maybe OpenAI’s. Musk is in a different position, having a vast empire that encompasses self-driving cars, robots and rockets. Maybe he will find a way to stick it out on his own.

An unanswered question is why Amazon would invest billions in OpenAI, particularly as it is already allied with Anthropic. The answer may be simple: CEO Andy Jassy has decided OpenAI will be one of the big winners in AI and is worth getting close to. By taking a stake in the company, Amazon could benefit financially if OpenAI succeeds. There's also potential business benefits: OpenAI has already committed to spend $38 billion on Amazon Web Services over several years, to be sure, but by investing Amazon could win more cloud business in the future. The investment could also help Amazon win over OpenAI as a customer for its Trainium chips, according to our report, which would be meaningful. There’s also the chance the two companies could work together on things like shopping or the development of agents. Moreover, if helping OpenAI succeed weakens Amazon’s rival Google, so much the better. (Meanwhile, Amazon today shook up its AI team.)

The Information : OpenAI Has Discussed Raising Tens of Billions at Valuation Aro

OpenAI Has Discussed Raising Tens of Billions at Valuation Around $750 Billion

The Takeaway
  • OpenAI discusses raising new funding at $750 billion valuation
  • Company aims to raise tens of billions, potentially up to $100 billion
  • Annualized revenue recently topped $19 billion

OpenAI has held preliminary discussions with some investors about raising new funding at a valuation of around $750 billion, according to three people with knowledge of the discussions. It could raise tens of billions of dollars, and as much as $100 billion, according to two of the people. Talks are early and nothing has been finalized.

A valuation at that level would be 50% higher than OpenAI’s last share sale in October and would add to its already substantial cash stockpile needed to train and run its AI models. It’s already started to line up funding in addition to the more than $60 billion it’s raised from investors including Thrive Capital, SoftBank and others. Amazon is in talks to invest $10 billion or more in the company.

It’s not clear which investors beside Amazon are considering investing and whether that valuation would include the new money. For a round of that size, OpenAI would likely need to tap a mix of strategic investors and sovereign wealth funds. It has already raised funds from the United Arab Emirates’ MGX and chip giant Nvidia. OpenAI has also talked to Saudi Arabia’s giant Public Investment Fund when it was raising money for its $41 billion, SoftBank-led round earlier this year, though OpenAI never disclosed any investment from PIF.

The decade-old AI developer can tout that revenue that has been growing quickly. By last month it was generating $19 billion in annualized revenue, putting it on track to hit its goal of $20 billion in annualized revenue by the end of the year.

The company is also on track to beat its 2025 total revenue goal of $13 billion, up from around $4 billion last year, according to one of the people. That figure should rise to $30 billion next year—and around $200 billion by 2030—on increased sales of ChatGPT subscriptions and new products, which could include advertising.

However, the company has forecast it will burn about $26 billion this year and next, en route to more than $100 billion in cash burn over the next four years as it spends money on servers and talent to develop and run its AI.

The discussions with potential investors in the fundraise mark a new high water mark for private investments in high-tech startups. Elon Musk’s SpaceX recently arranged a share sale that valued the rocket launch company at $800 billion, while Alphabet’s Waymo is discussing raising billions of dollars at a valuation of more than $100 billion.


The OpenAI fundraise, if successful, would also underscore investor confidence in OpenAI as it fights to retain its lead in AI usage against the much larger Google. Earlier this month, OpenAI CEO Sam Altman told staff he was declaring a “code red” to focus staff on improving ChatGPT. The communication followed Google’s fall release of its Gemini 3 model, which was well received by software developers.

In late October, OpenAI successfully restructured itself as a public benefit corporation that could pave its path to going public. The company in the summer discussed going public in late 2026 or 2027, and it told investors that it expected to raise $90 billion in capital—which could be from a mix of private and public investors—in 2027. It is not clear how the new fundraise would impact any public listing efforts.

An OpenAI valuation of around $750 billion would mark up the value of a cadre of financial investors who have bought shares in the company in recent years. Just over a year ago, Thrive led a round that valued it at $157 billion before the investment. Then earlier this year, SoftBank led a round that valued the company at $260 billion. Still, the new valuation would represent just 25 times OpenAI’s expected revenue next year—far lower than some AI startups.

>>> US After Hours Summary: MU +8.1% and MLKN +8.8% sharply higher on earnings;

After Hours Summary: MU +8.1% and MLKN +8.8% sharply higher on earnings; BP +0.3% on CEO transition news; EPAC -7.8% lower on earnings

After Hours Gainers:

Companies trading higher in after hours in reaction to earnings/guidance: MLKN +8.8%, MU +8.1%, WS +0.2%

Companies trading higher in after hours in reaction to news: VFF +7.7% (appoints new Global Strategy Officer), HQI +5% (approves $20 mln share repurchase program), WDC +2.6% (in sympathy with MU earnings), IMRX +2.4% (on track to dose the first patient in its planned global Phase 3 registrational trial), IONQ +2.4% (expanded agreement with QuantumBasel), ITGR +2.1% (Activist investor Irenic urging Integer Holdings to explore a potential sale, according to WSJ), HTBK +2% (co and CVBF to merge in all stock transaction), STX +2% (in sympathy with MU earnings), QMCO +1.8% (approval to exchange term debt for convertible notes), COIN +1.5% (stock trading now available), MAA +1.2% (increases dividend), JOBY +1% (supports the U.S. Department of Transportation's Advanced Air Mobility National Strategy), ABVX +0.9% (acceptance of 22 abstracts evaluating obefazimod), HUM +0.8% (awarded a $7.3 bln Defense Health Agency contract option), DASH +0.6% (teams up with openAI), TRIN +0.4% (transition to monthly dividends), BP +0.3% (CEO to step down; names new CEO), CRM +0.2% (to acquire Qualified), SG +0.2% (co-Founder and Chief Brand Officer to retire), EFX +0.1% (secures 27 patents in second half of 2025), SEMR +0.1% (launches official app in ChatGPT)

After Hours Losers:

Companies trading lower in after hours in reaction to earnings/guidance: EPAC -7.8%

Companies trading lower in after hours in reaction to news: INSM -19.1% (clinical and business update; discontinues CRSsNP; acquires phase 2 ready asset INS1148), KLRS -18.2% (reports initial Phase 1a data for TH103), UNP -0.3% (to develop the Mainline Texas Industrial Park), FRT -0.1% (sale of two assets for $170 mln)

WSJ : Elliott Builds Over $1 Billion Stake in Lululemon

Elliott Builds Over $1 Billion Stake in Lululemon
The activist investor is pushing for former Ralph Lauren executive Jane Nielsen to be Lululemon’s new CEO

  • Activist investor Elliott Investment Management has acquired a stake exceeding $1 billion in Lululemon Athletica.
  • Elliott is proposing veteran retail executive Jane Nielsen as a potential CEO candidate for Lululemon.
  • Lululemon’s shares have fallen over 60% from their peak, and its CEO will step down in January.

Activist Elliott Investment Management has built a stake of over $1 billion in Lululemon Athletica LULU 0.55%increase; green up pointing triangle and is bringing a potential CEO candidate to the struggling athletic apparel retailer it wants to help turn around, according to people familiar with the matter.

The stake makes Elliott among the biggest investors in Lululemon, which has a market value of around $25 billion.

It is a tumultuous time for Lululemon, which announced last week that Chief Executive Officer Calvin McDonald will step down in January and that the business faces pressure to reverse many missteps from quality issues to “losing its cool.”

Elliott has been working closely with veteran retail executive Jane Nielsen, a former chief financial officer and chief operating officer at Ralph Lauren, who they see as a potential Lululemon CEO candidate, the people familiar with the matter said.

The activists’ arrival, and CEO candidate, comes as Lululemon founder Chip Wilson had already been agitating for change and weighing in on the CEO search. Before McDonald’s departure was announced, Wilson had been attacking Lululemon publicly for killing innovation and losing what made the brand “cool” in the first place.

McDonald, who had served as an executive at beauty chain Sephora, took the helm of Lululemon in 2018 and steered the business through the pandemic, tripling its annual sales during his tenure to $10.6 billion. He is expected to give up his board seat but remain a senior adviser through March to facilitate a smooth transition.

The Vancouver-based retailer revolutionized athletic apparel with leggings that were so functional and flattering that people wore them to not only yoga class but brunch, the supermarket and just about everywhere else.

A crop of newer athletic apparel competitors including Vuori and Alo Yoga have eaten into market share, but Lululemon has made missteps on its own, analysts and customers say.

Recent decisions, including deals to sell apparel embellished with Mickey Mouse or NFL logos, have raised eyebrows. Lululemon has also leaned more heavily into discounting products, weighing on profits and the brand’s image. Merchandise piled up in stores, leaving them cluttered.


Lululemon shares have collapsed more than 60% from their peak, leaving the company trading at multiples below other retailers, including American Eagle Outfitters and Victoria’s Secret, according to analysts.

In Nielsen, Elliott sees a retail pro that can help revitalize the Lululemon brand, the people familiar with the matter said. Elliott and Nielsen have been working together on evaluating this opportunity for months, the people added.

“Lululemon is one of the most powerful brands in retail, defined by exceptional products, deeply engaged communities and significant global potential,” Nielsen said in a statement to The Wall Street Journal. “I would welcome the chance to discuss this opportunity with the Lululemon board.”

Before joining Ralph Lauren in 2016, Nielsen was the finance chief at handbag maker Coach. During her tenure there, Coach closed underperforming stores and got inventory under control, helping the namesake brand post its first quarterly sales increase in North America in almost three years. During her time at Ralph Lauren, shares more than doubled and profit margins swelled as the apparel maker cut back on discounting—following a similar playbook from Nielsen’s Coach days. Nielsen left Ralph Lauren at the end of March.

Wilson, the Lululemon founder, has said the Lululemon board needs to find a new CEO with urgency, adding he was “deeply concerned about what appears to be a tremendous failure by the board to competently plan for the future and manage an effective succession process.”

Lululemon board chair Marti Morfitt has said the company has a “strong foundation in place” to pick a new leader.

Elliott is the biggest activist investor, with over $76 billion in assets under management. The firm has made a number of other recent investments in the consumer sector, including at PepsiCo and Starbucks. Earlier this month, Pepsi struck an agreement with Elliott committing to cut costs and lower prices.

WSJ : Warner Demands Larry Ellison’s Personal Guarantee in Paramount Bid

Warner Demands Larry Ellison’s Personal Guarantee in Paramount Bid
In rejecting hostile takeover bid, Warner questions Ellison family trust and commitment to a $77.9 billion deal

Warner Bros. Discovery WBD -2.39%decrease; red down pointing triangle sent a message to Larry Ellison: If you want to buy our company, sign on the dotted line yourself.

Warner urged its shareholders Wednesday morning to reject Paramount Skydance’s PSKY -5.42%decrease; red down pointing triangle hostile takeover bid, saying the Ellison family-led bid was inadequate on multiple levels compared with that of rival Netflix NFLX 0.23%increase; green up pointing triangle.

Warner said it had lingering concerns about the financing, including the use of an Ellison family trust to backstop the deal. The company wants Larry Ellison to give a stronger personal guarantee that he, not an opaque trust, is fully committed to the $77.9 billion bid.

Ellison, the billionaire founder of Oracle ORCL -5.40%decrease; red down pointing triangle, is among the world’s richest men, even briefly holding the title of the richest this year. Yet his son David Ellison is fighting over Warner just as Oracle’s shares are under pressure over concerns about its bets on the artificial-intelligence boom. The stock fell 5% on Wednesday on reports of a potential financial partner spurning a data center Oracle was building.

Paramount’s $77.9 billion bid is already a higher price for Warner than Netflix’s $72 billion offer. But Warner says it isn’t that simple. Netflix is buying only Warner’s studio and HBO Max streaming businesses. Warner shareholders would continue to own a spinoff housing Warner’s cable networks including CNN and TNT.

Warner is saying it can’t know if Paramount’s all-cash bid will close unless the Ellisons disclose more about the trust or sign a deeper commitment.

Paramount isn’t likely to raise its bid immediately, if at all, people familiar with the matter said. Instead, it is engaging with shareholders and, with the help of its proxy advisers, gathering feedback to its tender offer about what it needs to do. That offer is currently set to expire on Jan. 8, though it could be delayed further.

David Ellison said Wednesday that he has been encouraged by the feedback received from Warner shareholders thus far and would continue to push forward.

Meanwhile, Paramount is continuing to make its pitch in Washington. On Tuesday evening, David Ellison and Paramount’s chief legal officer, Makan Delrahim, were at a dinner with White House representatives and lawmakers including Sen. Ted Cruz (R., Texas), chairman of the Senate Commerce Committee.

Mark Boidman, head of the Media & Entertainment Group at the investment bank Solomon Partners, said he doesn’t expect the showdown to conclude soon.

“We expect this roller coaster has many twists and turns and the winner will reshape the media landscape as we know it by integrating some of the most iconic studio and streaming assets,” he said.

The revocable trust
In a lengthy filing published Wednesday about Paramount’s and Netflix’s quests to get a deal, Warner detailed all the reasons it deemed the Netflix bid superior. At the crux of its decision is a belief that the Ellisons wouldn’t be good for their money.

Paramount’s bid rests on $40.7 billion in equity commitments and $54 billion of debt commitments from Bank of America, Citigroup and Apollo.

Within that, the Ellison family has pledged $11.8 billion, alongside $24 billion from three Middle East sovereign-wealth funds, and additional financing from Paramount stakeholder RedBird Capital Partners. (Jared Kushner’s firm Affinity Partners had been in the mix for less than $1 billion, people familiar with the matter said. But he withdrew from the process earlier this week, a move that isn’t expected to disrupt the wider group, the people added.)

The Ellison family has vowed to backstop the whole $40.7 billion equity commitment, crucial to winning over the Warner board and shareholders that the deal would close.

The filings show that both Ellisons were deeply involved in the process. In late September, after Warner rejected Paramount’s first proposal to buy the company, David Ellison phoned Warner CEO David Zaslav to request that he meet with his father. They all later had a videoconference meeting. Larry subsequently appeared in numerous other meetings, according to Warner’s filing.

On Wednesday, Warner said the Ellisons’ equity is supported by “an unknown and opaque revocable trust,” also citing “gaps, loopholes and limitations” in the documents Paramount has so far provided.

A revocable trust is simply an agreement, holding assets of the person who set it up for the benefit of whomever they designate, typically themselves, while they are alive. Usually when the creator (grantor) dies, the trust becomes irrevocable and holds the assets for the listed beneficiaries.

Paramount said in response that Warner is misleading its own shareholders, denying that this is a “complicated question about legal documents.”

“In reality, it is all quite simple: $30 in cash fully backstopped by a well-capitalized trust (in existence for approximately 40 years) of one of the most well-known founders and entrepreneurs in the world, Larry Ellison,” Paramount said.

Paramount said the Ellison family trust contains over $250 billion of assets—which is more than six times the equity funding commitment—including roughly 1.16 billion Oracle shares and “tens of billions of dollars in other assets.” It added that the trust has been a counterparty in other already-completed deals, including for Twitter.

Jay Adkisson, a creditor-rights lawyer, said only someone with access to the documents could determine whether the trust and asset pledge offered a firm enough equity backing in the deal.

The focus on the Ellison family wealth comes during a tough stretch for Oracle.

In September, Larry Ellison briefly surpassed Elon Musk as the world’s wealthiest person when Oracle’s shares rode a high from news that it had $455 billion in incoming revenue, largely due to a $300 billion contract with OpenAI.

Oracle’s shares have plummeted more than 40% since then, cutting Ellison’s wealth by more than $170 billion, according to an analysis of his Oracle stake by Dow Jones Market Data. Oracle’s market capitalization has lost more than $400 billion.

Investors have grown nervous about the amount of debt Oracle is taking on to build out data centers primarily for OpenAI, and about the software giant’s reliance on a startup that is burning through cash and isn’t expected to be profitable until around 2030.

Larry Ellison’s net worth is now around $243 billion, dropping him to fifth overall in Bloomberg’s billionaires index. He has a chunk of some $62 billion in shares pledged as collateral to secure “certain personal indebtedness,” according to a September filing.

Warner shareholders seem still to have mixed feelings. Money manager Mario Gabelli, a Warner shareholder, has said he is likely going to tender his shares into the Paramount deal, believing that it will be easier for them to get the deal done versus Netflix.

Another big Warner shareholder told The Wall Street Journal he is frustrated with Paramount’s response on Wednesday, saying that the company still hasn’t addressed Warner’s concerns in full and is making it harder for investors, including himself, to fight on the Ellisons’ behalf.

FT : Lula threatens to walk away from EU-Mercosur trade deal

Lula threatens to walk away from EU-Mercosur trade deal
Warning comes after Italy and France pushed to delay vote on landmark agreement with South American nations

Brazilian president Luiz Inácio Lula da Silva has threatened to walk away from a blockbuster trade deal with the EU after key countries asked Brussels to delay a vote to approve the agreement.

France and Italy have asked to postpone a vote planned for this week that would allow the EU to sign the pact with the Mercosur trade bloc of South American countries on Saturday, demanding extra guarantees to protect European agriculture.

“I already warned them: if we don’t do it now, Brazil won’t make any more deals while I’m president,” Lula told a ministerial meeting on Wednesday.

“We’ve been waiting for this agreement for 26 years. The agreement is more favourable to them than to us. [French President Emmanuel] Macron doesn’t want to do it because of his farmers, Italy doesn’t want to do it for I don’t know what reason,” he said.

“We’ve conceded everything that diplomacy could possibly concede.”

EU officials said that European Commission president Ursula von der Leyen intended to travel to Brasília on Saturday to sign the accord.

Italy is demanding that Mercosur — which also includes Argentina, Uruguay and Paraguay — agrees to fresh binding protections for EU farmers.

Two EU diplomats said Rome was insisting on an exchange of notes to recognise measures that the EU would take if food imports damaged its producers’ incomes.

“If we do not sign this week it will die,” said a third EU diplomat. “The Latin Americans are getting tired of Europe.”

However, the diplomats said a compromise could be found at a summit in Brussels on Thursday.

Countries including Germany and Spain are desperate for the deal to increase their exports of cars and machinery. But with Poland also opposing the deal, Italy — whose industrial sector strongly supports the agreement — is needed to reach the requisite majority in favour. 

In response to the opposition, the European Commission proposed a legally binding formula dictating its response if farmers were found to be disadvantaged by lowering tariffs on beef, chicken and cereals.

“Bilateral safeguards . . . to reassure farmers” must be “accepted by Mercosur by exchanging notes,” said one of the two EU diplomats.  

The European parliament and member states were due to finalise the safeguards on Wednesday night. They would force the commission to investigate if imports increased or prices dropped in a single country, and potentially reimpose tariffs. 

Italian Prime Minister Giorgia Meloni told the parliament in Rome on Wednesday that signing the deal this week was “premature”.

She welcomed additional measures including a compensation fund, more border checks and increasing inspections of producers in export countries, but added: “All these measures, although presented, have not yet been fully finalised.”

Maroš Šefčovič, EU trade commissioner, warned on Monday that delaying the approval vote could sink the deal, which would be the EU’s biggest ever.

“I think that this is a matter of the credibility and predictability of the EU,” he told the Financial Times.

“We talk often in Europe of the need to be strategic. There is a strategic decision to be taken.”

Benjamin Dousa, Sweden’s trade minister, told the FT in an interview that it was vital to show Europe was “open for business”. “Maybe we’re just sitting here on a sinking ship where we’re falling behind both Asia and of course the US,” Dousa said.

An official in a Mercosur nation said: “What is clear is that protectionism is alive and well within the EU.

“Concessions for Mercosur agribusiness were minimal, basically small quotas, and even so the protectionists make last-minute additional demands to a deal closed a year ago.”

Former Paraguayan president Santiago Peña in September 2023 told the FT that Mercosur would walk away if the EU did not finalise the long-delayed treaty. The two sides ended up reaching an agreement a year ago.

FT : Elon Musk makes an unhelpful cameo in Warner Bros buyout

Elon Musk makes an unhelpful cameo in Warner Bros buyout
Hollywood studio wants Larry Ellison to offer an airtight personal guarantee, like the Tesla boss did with Twitter

Faced with a $108bn bid backed by Oracle chair Larry Ellison, the directors of Warner Bros Discovery seem to have found themselves thinking of Elon Musk. The Tesla boss signed a merger agreement for social network Twitter in 2022, and then tried to walk away from it. Ellison is not Musk, but he could do a little more to prove it.

WBD on Tuesday shared its reasons for declining a $30-per-share offer from Paramount Skydance, the media conglomerate controlled by Ellison’s family. WBD is instead sticking by its endorsement of a deal with Netflix, which offers $27.75 in the form of cash and Netflix stock, as well as equity in a spin-off cable networks business worth perhaps a few bucks.

Its reasoning rests partly on the structure of the funding. Of the $41bn equity contribution, only $12bn comes from Ellison, and the rest from various Middle Eastern wealth funds. Ellison has offered to “backstop” the whole equity portion, but WBD protests at the entity he is using, a “revocable trust”. It wants Ellison to offer an airtight personal guarantee, as Musk did, not one issued by an “estate-planning vehicle with no transparency”.


Paramount argues that the Ellison trust, which dates back to 1988 and holds his 40 per cent stake in Oracle, is simply the billionaire’s preferred way to handle his affairs. He has, after all, used it countless times over the past three decades to fund deals including his own investment in Musk’s Twitter bid, although that was much smaller than this current deal.

Still, while that bolsters the argument that Ellison won’t walk away from his promises, it does not guarantee that he cannot do so, to WBD’s satisfaction. In theory, he has the power to move assets in and out of the trust. WBD notes that, if a court cannot later force the Paramount buyout to close, the trust is only on the hook for monetary damages of less than $3bn.

Musk, of course, did try to walk away from Twitter, claiming the company had misrepresented its spam problems. But he ultimately closed the deal as it became clearer that he had little legal leg to stand on. WBD pointed out in Tuesday’s filing that Paramount’s legal adviser is Quinn Emanuel, the same firm Musk used to attempt his foiled escape from Twitter.

Faced with the option of $30 in cash, versus Netflix’s more complicated and seemingly less valuable alternative, WBD investors may prove to be more tolerant of the potential wrinkles in Paramount’s financing than the board. The comparison is further muddied by the other risks to closing, which include regulatory reviews in multiple jurisdictions.

Even so, it would be fairly easy for Ellison to increase his odds. As the owner of $206bn of Oracle shares, he can afford to tighten up the Paramount offer with a more direct backstop or even direct contribution, and raise the offer by a couple of dollars per share to make clear it’s financially superior too. Sure, he might not want to; in a more straightforward world he might not have to. But success in Hollywood is all about knowing how to engage an audience.

The Information : Banks Pitching Mega IPOs Seek to Limit Mass Selling

Banks Pitching Mega IPOs Seek to Limit Mass Selling
SpaceX, Anthropic and OpenAI might try to spread out selling by current shareholders to avoid a flood of stock hitting the market.

Wall Street is gearing up for three potentially record-setting initial public offerings over the next 18 months. The talk among bankers is not about what SpaceX, Anthropic and OpenAI will do on their big days but about what happens after that, when the companies’ existing shareholders try to unload their multibillion-dollar stakes.

Each of the three has raised some of the largest amounts ever for private companies. That creates the risk that when they go public, early investors will flood the market with so much stock that it will depress prices. That’s always a danger for companies going public, which is why early investors are typically prevented from selling for three to six months. But the sheer amount of stock held by early investors in SpaceX, Anthropic and OpenAI heightens the risk for the tech giants.

Investment bankers are starting to prepare for that reality, discussing proposed solutions to help win deals, even before some of the official IPO work has begun. At least two large banks largely ruled out a standard IPO lockup period of either 90 to 180 days and are discussing how to design a staggered lockup release for companies like OpenAI and Anthropic, bankers said.

Bankers have started floating that idea with existing investors in some of the companies, who would need to sign off on the plans, said an Anthropic investor.

“The bankers, given the size of the IPOs, have to rethink how traditional lockups are done,” said Jon Redmond, a former Morgan Stanley banker who is now portfolio manager at the hedge fund Discovery Capital.

Bankers and people close to the company expect SpaceX to lead the IPO parade, with a listing taking place next summer. Bankers vying to lead the IPO are scheduled to meet with the company this week, according to a person briefed on the plans. A SpaceX spokesperson didn’t return a request for comment.

The preparations for OpenAI and Anthropic are less advanced and their timing plans appear more fluid. But investors and advisers expect the companies to list either late next year or sometime the following year. An OpenAI spokesperson declined to comment. An Anthropic spokesperson pointed to comments made by chief communications officer Sasha de Marigny this month that the company was “keeping our options open” but had “no immediate plans to go public.” OpenAI declined to comment.

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Anthropic tentatively expects to list publicly toward the end of next year or in early 2027 and has been talking to banks informally about what an IPO would look like, an investor in the company said. OpenAI has been discussing whether to list in 2026 or 2027, an adviser said.

Anthropic and OpenAI have each raised tens of billions of dollars privately, far more than any other tech firm, while SpaceX has raised about $10 billion, according to PitchBook. OpenAI and Anthropic need to raise significantly more capital to fulfill expensive plans to build data centers, while SpaceX is trying to build larger rockets. Investment bankers thought each could raise between $25 billion and $50 billion in their IPOs, making them the largest tech offerings of all time.

Companies going public generally allow some large shareholders, including current and former executives, to sell a portion of their shares in the offering. But the vast majority of shares held by early investors can’t be sold for six months. Some companies in recent years, like Airbnb and Instacart, have made exceptions to those rules by allowing shareholders to sell earlier if the stock price hits certain milestones.

One model could be the 2012 IPO of Facebook, among the largest tech listings in history, which raised about $16 billion. The social network put in place a staggered lockup release to prevent shares from flooding the market. A more recent case could be Figma, which after its July listing got shareholders who own a majority of the company to agree to hold on to shares for more than a year.

With the coming crop of IPOs, investment bankers have internally discussed how to structure the lockup. One option is staggering the dates to prevent a wave of selling on one day. IPO bankers and lawyers said investors could be allowed to sell a portion of their holdings every 20 to 30 days. Releases can also be triggered when the stock hits a certain price, they said.

Another tricky issue with these giant offerings is how much to allocate to small investors, who have been unable to get a piece of these companies and are expected to gobble up the shares. IPO advisers don’t want to allocate too little and watch the price pop, only to tumble when new shares hit the market.

Then there’s the element of surprise. Redmond, the former banker, said banks should consider getting securities regulators’ blessing to allow companies to provide less disclosure about when lockups will end. “I think people are thinking about it,” he said. “I haven’t seen anything done in practice, but we haven’t seen IPOs like this in our lifetime.”

The banks that solve these problems could reap billions of dollars in fees. Investment banks typically take a single-digit percentage cut of IPO proceeds, which gets magnified in such large deals. “Fifty billion dollars times 3% is $1.5 billion in fees,” said one investment banker whose firm will try to be in on the deals.

Morgan Stanley and Goldman Sachs dominate the tech IPO business, with one or the other leading the vast majority of such listings. Morgan Stanley has been particularly close to SpaceX CEO Elon Musk lately. He hired Morgan Stanley for his bid to take Twitter private and for the merger between X and xAI. Musk also recently hired former Morgan Stanley banker Anthony Armstrong as chief financial officer of xAI, his AI firm. Goldman Sachs led Tesla’s IPO in 2010.

Goldman Sachs has recently been close to OpenAI, and the bank advised OpenAI on its restructuring from a nonprofit earlier this year. Sarah Friar, OpenAI’s CFO, is a former Goldman equity research analyst. Morgan Stanley, meanwhile, has courted OpenAI from its early days and signed on as one of its first clients, as well as collaborating with OpenAI to build products for Morgan Stanley’s research and wealth management team.

Spokespeople for Morgan Stanley and Goldman Sachs declined to comment.

Banks’ pitches will also likely include promises to lend money to the companies in the future and agreements to become larger corporate customers, former bankers said.

One former Morgan Stanley banker said the ultimate choice of a winner in the deals is unlikely to center on “who will tell the story best.” Instead, “it’s much more, ‘What have you done for us?’”

>>> US Gapping down

Gapping down
In reaction to earnings/guidance
:
  • PLCE -32.7%, WOR -9.4% (also to acquire LSI Group), LEN -4.2%
Other news:
  • IPX -2.2% (advises that titanium production and manufacturing operations at the titanium manufacturing campus in Virginia, United States, have achieved ISO 9001 certification)
  • EPRT -1.9% (names new CFO)
  • PSKY -1.8% (unanimously recommends shareholders reject Paramount (PSKY) tender offer)
  • HNRG -1.5% (advances expansion into nat gas power generation via ERAS application; also $50 mln offering under existing ATM program)
  • SBGI -1.5% (SSP says SBGI proposal is not in the best interests of the company)
  • IMNM -1.4% (prices offering of 18,625,000 shares of its common stock at $21.50 per share)
  • CLCO -1.2% (announces meeting date for Special Meeting for Proposed Merger with Newly Formed, Wholly Owned Subsidiary of EPS Ventures Ltd)
  • WBD -1.1% (unanimously recommends shareholders reject Paramount (PSKY) tender offer)
  • HY -1.1% (CFO to resign)
  • KOD -1% (prices offering 6,956,522 shares of common stock at $23.00 per share)
  • TIPT -0.9% (CEO to become non-exec Vice Chairman; names new CEO)