(Dec 23): Larry Ellison has built the world’s third-largest fortune by holding tight to his Oracle Corp stock, rarely selling his shares and instead relying on loans to fund billions in investments and lifestyle expenses.
But a potential US$40 billion-plus personal guarantee to backstop Paramount Skydance Corp’s all-cash bid for Warner Bros Discovery Inc would be his biggest investment yet, and could reshape his wealth by possibly forcing the billionaire to pare his Oracle holdings and shift a substantial chunk of his fortune to a relatively unproven, debt-laden media conglomerate led by his 42-year-old son.
To be sure, the 81-year-old Oracle co-founder — with a net worth of more than US$252 billion, according to the Bloomberg Billionaires Index — can afford his side of the bargain many times over. Despite Oracle’s recent reversal from all-time highs, Ellison’s wealth has still increased by US$60 billion since Jan 1.
However, the structure of Ellison’s fortune means that turning those gains into cash to fund a potential backstop could present challenges. Ellison has for decades taken out debt against his holdings, with about 30% of his Oracle stake currently pledged as collateral to secure personal loans, according to the company’s 2025 proxy statement.
That’s grown over the years, with the number of pledged shares increasing by about 25% in the 12 months through September to a current total value of about US$69 billion. His unpledged shares are worth another US$161 billion.
Oracle’s proxy statement didn’t disclose loan-to-value ratios on that debt, but said that the company’s board doesn’t believe Ellison’s pledging arrangements pose a risk since none are underlying margin loans. The board also said it’s confident Ellison has the financial capacity to repay the debt without resorting to selling the pledged shares.
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Michael Egbert, a spokesperson for Oracle, declined to comment, while a representative for Paramount didn’t respond to a request for comment.
The arrangement is reminiscent of when Elon Musk bought Twitter Inc, now X, in 2022 with billions of dollars of margin loans backed by Musk’s stake in Tesla Inc being discussed as part of the financing for the US$44 billion deal. Ultimately, it relied instead on more traditional debt and third-party investors, as well as cash from Musk, who sold Tesla stock worth nearly US$23 billion that year. The speculation over margin loans and sales weighed on Tesla’s stock price as the deal was in progress, and the next year the company’s board introduced new rules limiting how much the CEO could borrow against his shares.
Personal guarantee
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Ellison, who co-founded Oracle in 1977, still owns about 40% of the company’s equity, far more than comparable tech founders. Mark Zuckerberg, for example, only owns about 13% of Meta Platforms Inc, while Jeff Bezos retains just about 8% of Amazon.com Inc.
Ellison has only sold about US$7.5 billion worth of Oracle stock, and no more than US$1 billion worth in a single year since 2010, according to Bloomberg’s wealth index. In addition, he has collected roughly US$15 billion in pretax dividends from his Oracle holdings.
Ellison’s decision to hold on to his stake has reaped him tens of billions as the company’s stock has soared this year. From an April 21 low through mid-September, Oracle shares gained 168%, including a 36% surge on Sept 10 alone, which briefly made Ellison the world’s richest man. Oracle has since given back some of those gains, but its shares are still up more than 18% this year.
Paramount’s initial all-cash bid for Warner Bros featured an array of financing partners, including the Qatar Investment Authority, RedBird Capital Partners and Jared Kushner’s Affinity Partners. Paramount specified that the equity financing would be guaranteed by assets held in a revocable trust controlled by Ellison.
Ultimately, Warner Bros favoured Netflix’s cash-and-stock offer, partly over concerns about the reliability of Ellison backstopping Paramount’s bid without guaranteeing the bid personally.
“PSKY has consistently misled WBD shareholders that its proposed transaction has a ‘full backstop’ from the Ellison family. It does not, and never has,” Warner Bros said in a Dec 17 letter to shareholders recommending they reject Paramount’s offer. “A revocable trust is no replacement for a secured commitment by a controlling stockholder.”
The updated bid clarifies that Ellison will be personally guaranteeing the equity commitment of up to US$40.4 billion, in addition to any damages claims against Paramount resulting from the deal, according to a statement on Monday.
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Lifestyle spending
A significant portion of Ellison’s non-stock holdings are tied up in real estate, art and other illiquid assets that he would likely be unable to immediately deploy.
In 2012, he spent US$300 million buying most of the Hawaiian island of Lanai, and has spent tens of millions of dollars more renovating two Four Seasons resorts on the island.
Ellison has also spent hundreds of millions on commercial properties including the Eau Palm Beach Report & Spa in Manalapan, Florida, which was appraised at US$203 million earlier this year, and numerous hotels and restaurants in California and Hawaii.
In July, Ellison ponied up the majority of the US$8 billion investment needed to complete the purchase of Paramount owner National Amusements Inc by Skydance Media, the studio run by his son David.
In 2010, the billionaire signed the Giving Pledge, promising to give at least 95% of his wealth to charitable causes.
Uploaded by Felyx Teoh
