Jared Kushner's firm backs out of Paramount's Warner Bros. bid

Affinity Partners, the fund tied to President Trump's son-in-law Jared Kushner, has backed out of Paramount's bid for Warner Bros. Discovery, Axios has confirmed. Why it matters: The news comes ahead of an expected announcement from the Warner Bros. board that it plans to reject Paramount's latest $30-a-share all-cash offer for the company. State of play: One of the main concerns the Warner Bros. board had with Paramount's original offer was whether it could close a deal if one of its seven funding partners (aside from RedBird Capital) backed out at the last minute.If the board does reject Paramount's offer, the onus will be on Paramount to decide whether or not to increase its bid.The Warner Bros. board faces a legal deadline of Dec. 22 to respond to Paramount's hostile takeover, but a source told Axios that a response should be expected sooner.What they're saying: "With ​two ​strong competitors ​vying to secure ​the future ​of this ​unique American ​asset, ​Affinity ​has ​decided no longer to pursue ​the opportunity," an Affinity spokesperson said. "The dynamics ​of the investment have changed significantly ​since we initially became ​involved ​in October. We ​continue to ​believe ​there is a strong strategic rationale for Paramount's offer."By the numbers: Paramount's first unsolicited bid began at just $19 a share — versus the $30 in play now — and included both cash and stock.But the value of Paramount's stock declined. After the board invited bids from suitors, Paramount's offers were cash-only.Were Paramount to come back with an increased offer, it would need to go above $30 per share, sources told Axios.Of note: Affinity Partners never had a substantial stake in the bid, sources told Axios, but some believed Kushner's affiliation with the Paramount offer could help Paramount with any regulatory scrutiny.Some 60% of the $40 billion in equity funding for Paramount's latest offer came from sovereign wealth funds, including the Kingdom of Saudi Arabia's Public Investment Fund, Abu Dhabi's L'imad Holding Company and the Qatar Investment Authority.Kushner is believed to have helped Paramount broker some of those funding relationships. State of play: Paramount had to make several key changes during the bidding process to gain consideration from the Warner Bros. board — explicitly promising that its foreign partners and Kushner's fund wouldn't have any voting or governance rights.The Ellison family and RedBird, the private investment firm that helped back its acquisition of Skydance and now WBD, were always set to have full governance control, but didn't make outright assurances about it until their latest bid, sources said.They reinforced that structure to avoid any national security concerns that could have otherwise been raised by the Committee for Foreign Investment in the U.S.Between the lines: Earlier versions of Paramount's bid also didn't include the Ellison family backstopping all $40.7 billion in equity commitments, including through their Oracle stock.What to watch: Analysts have questioned why Paramount had to take on so much leverage and foreign money to finance its bid, if it has access to the Ellisons' money.Worth noting: Shares of Oracle, controlled by Larry Ellison, have dropped roughly 45% from their September high.