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Paramount's revised filing with the U.S. Securities and Exchange
Commission of its takeover bid said the Chinese company had
dropped its $1 billion financing commitment out of concern,
since it would be a “non-U.S. equity financing source,” that its
bid might be subject to a review by the Committee on Foreign
Investment in the United States, known as CFIUS. That was even
though approval by CFIUS or by the Federal Communications
Commission was not a condition of the bid.
The SEC filing, dated Monday, said that foreign sovereign wealth
funds of Saudi Arabia, Abu Dhabi and Qatar, which are providing
$24 billion for Paramount’s bid, had agreed to give up a right
to participate in Warner Bros’ management to avoid the
additional scrutiny.
On Monday, Paramount launched a hostile $77.9 billion takeover
offer for Warner Bros. Discovery, competing with rival bidder
Netflix to buy the company behind HBO, CNN and a famed movie
studio.
Big deals that involve foreign companies are sometimes subject
to national security reviews by CFIUS, a U.S. government group
chaired by the Treasury Secretary that studies mergers for
national-security reasons. It has the power to force companies
to change ownership structures or divest completely from the
U.S.
Under former President Joe Biden as well as President Donald
Trump, the Treasury Department has sought to strengthen its
powers as national security concerns related to foreign
investment have increased.
Tencent is among dozens of Chinese companies that the U.S.
Defense Department has included in a list of companies it said
have ties to China’s military. Tencent, whose shares are listed
in Hong Kong, denies that.
Based in the southern technology and financial hub of Shenzhen,
Tencent owns the League of Legends developer Riot Games and has
ties with other big U.S. entertainment brands. It also has a
streaming deal with the National Basketball Association.
It is the world's largest equity investor in online games and a
major entertainment and social media company, operating the
WeChat messaging and payments service in popular China and with
Chinese emigrants abroad. Tencent has a market capitalization of
over $700 billion, according to Hong Kong's stock exchange.
There was no immediate comment from Tencent.
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