By Ellen Kurtenbach
BANGKOK (AP) — Chinese video game and social media giant Tencent Holdings has withdrawn from Paramount Skydance Corp.’s bid for Warner Bros. Entertainment. Discovery, according to a revised filing for a takeover bid Paramount filed with the U.S. Securities and Exchange Commission.
A filing seen Wednesday shows that the Chinese company has withdrawn its $1 billion financing commitment for the takeover bid.
Paramount said the Chinese company’s participation in the bid raised concerns because it would be a “non-U.S. equity financing source,” which could subject its bid to review by the Committee on Foreign Investment in the United States, known as CFIUS. This is despite the fact that approval from the Committee on Foreign Investment in the United States or the Federal Communications Commission was not a requirement for the offer.
The SEC filing, dated Monday, noted that foreign sovereign wealth funds from Saudi Arabia, Abu Dhabi and Qatar, which are providing $24 billion for Paramount’s bid, agreed to cede the right to participate in management of Warner Bros. to avoid additional scrutiny.
Paramount on Monday made a hostile bid to acquire Warner Bros. Studios. Discovery is valued at $77.9 billion, competing with rival Netflix to buy the company that controls HBO, CNN and a popular movie studio.
Large transactions involving foreign companies are sometimes subject to national security reviews by the Committee on Foreign Investment in the United States, a US government group headed by the Secretary of the Treasury that considers mergers on national security grounds. It has the potential to force companies to change ownership structures or divest entirely from the United States.
Under former President Joe Biden, as well as President Donald Trump, the Treasury Department sought to strengthen its powers as national security concerns related to foreign investment increased.
Tencent is among dozens of Chinese companies that the US Department of Defense included on a list of companies that it said have ties to the Chinese military. Tencent, whose shares are listed in Hong Kong, denies this.
Headquartered in the southern financial and technology hub of Shenzhen, Tencent owns Riot Games, which developed League of Legends and has relationships with other big American entertainment brands. It also has a broadcast agreement with the National Basketball Association.
It is the world’s largest equity investor in online gaming and a major entertainment and social media company, and operates the messaging and payments service WeChat in the People’s Republic of China and with Chinese immigrants abroad. Tencent has a market capitalization of more than $700 billion, according to the Hong Kong Stock Exchange.
There was no immediate comment from Tencent.
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This story was translated from English by an AP editor with the help of a generative artificial intelligence tool.