After They Withdrew From $1B Equity Commitment In Ellison’s December Offer, Tencent’s Mulling Return To Skydance’s WarnerDiscovery Deal As Passive Investor With Fresh Funding Of Several Hundred Million Dollars. While Tencent Might Not Do It, Other Strategic Financial Partners May Even Join As Well.

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“Tencent Holdings Ltd. intends to invest several hundred million dollars in Paramount Skydance Corp.’s acquisition of Warner Bros. Discovery Inc., according to people familiar with the situation.

The Chinese company would be acting as a passive financial investor, the people said, asking not to be identified because the matter is private.

Paramount’s offer for Warner Bros. in December included a $1 billion equity commitment from Tencent, according to a filing at the time, but that was withdrawn after Warner Bros. raised concerns that the Chinese company’s presence could lead to national security challenges with US regulators. After Paramount raised and amended its offer, Warner Bros. agreed to sell to the David Ellison-led company in a deal worth $110 billion.

Tencent might still decide not to invest, the people said, adding that it could take a while for the deal to be completed.

Representatives for Tencent and Paramount declined to comment.

Chinese ownership of US assets has been a cause for concern in Washington, resulting in a deal for social media site TikTok’s US operation this year.

Supercell Oy, a Finnish video-game company owned by Tencent, said this month it is cooperating with a US security probe of its Chinese parent’s data practices.

Tencent already holds a minority nonvoting stake in Paramount. It also has co-financed films produced by Skydance such as Terminator: Dark Fate, and helped with marketing and distribution of the studio’s blockbusters since its strategic investment in the then Skydance Media in 2018.

Paramount’s acquisition of Warner Bros. is funded by $47 billion in equity backed by the Ellison family and RedBird Capital Partners. Other strategic financial partners may join at closing of the transaction, which is also backed by $54 billion of debt commitments from Bank of America Corp., Citigroup Inc. and Apollo Global Management Inc.

Existing Paramount shareholders may be able to participate in a rights offering of up to $3.25 billion Class B stock alongside the new equity investment.”