Tencent has withdrawn from Paramount Skydance's hostile bid to acquire Warner Bros Discovery, citing concerns over increased US regulatory scrutiny of foreign investment, according to a filing with the US Securities and Exchange Commission. The Chinese tech conglomerate had initially committed $1 billion to Paramount's Dec. 1 offer, but it was dropped as a financing partner in the company's revised, all-cash proposal of $30 per share that was announced on Monday, per the South China Morning Post.
That removal followed Warner Bros. airing concerns that Tencent's involvement as a non-US equity financier could prompt a review by the Committee on Foreign Investment in the United States, or CFIUS. The AP notes that "big deals that involve foreign companies are sometimes subject to national security reviews by CFIUS," which is described as a "US government group led by the Treasury secretary that studies mergers for national-security reasons."
Tencent, which didn't immediately respond to a request for comment, is China's most valuable technology giant, with a market capitalization of about $700 billion and more than $20 billion in cash and equivalents as of September, per the SCMP. The company, which already holds stakes in multiple US tech and gaming firms, has faced increased scrutiny in the US since January, when the Pentagon labeled it a "Chinese military company"—a designation Tencent has disputed. Tencent's $1 billion commitment wasn't said to be central to the bid.
The revised offer also saw three Middle Eastern sovereign wealth funds and Affinity Partners, the private equity firm of President Trump's son-in-law Jared Kushner, agree to forgo governance rights, including board representation, in an effort to avoid CFIUS jurisdiction. Paramount's $108 billion offer is competing with Netflix's $72 billion plan to acquire Warner Bros., as major players in the global streaming and media industry vie for control of the Hollywood studio. Bloomberg has more on Tencent's "global games empire."
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