What will this mean for Disney/MGM Studios at WDW?
NEW YORK (Reuters) - Legendary film studio Metro-Goldwyn-Mayer Inc.
(NYSE:MGM - News) is in advanced talks to be bought by Sony Corp.
(Tokyo:6758.T - News) and two buyout firms in a deal that could be worth close
to $5 billion, sources close to the deal said on Wednesday.
The buyout firms, Texas Pacific
Group (News - Websites) and
Providence Equity Partners, are
in discussions with MGM, which
is roughly 74 percent owned by
billionaire financier Kirk
Kerkorian, sources said.
MGM, whose stock jumped 12
percent on the news, has hired
investment bankers at Goldman
Sachs to represent it, the
sources said.
The deal envisions the suitors
buying the entire company, which
would require Kerkorian's approval. Kerkorian, who has owned MGM three
times in its long history that dates back to the silent movie era, is keen to sell,
sources close to the company and industry watchers have said.
"They had talked to Sony (in the past) -- we knew that," said Hal Vogel, a New
York-based fund manager. "They had talked to many people. This is one that
seems to be serious."
Current talks involve the three partners splitting a $1.5 billion cash payment and
borrowing the rest to finance the deal, sources said, adding that negotiations
could fall apart at any time,
The current deal envisages a cash transaction that would pay a premium to
MGM's market capitalization of $4.1 billion before the news, sources said.
MGM, Sony, Texas Pacific Group and Goldman Sachs all declined to comment.
Providence Equity could not immediately be reached. Other firms have also
been in involved in talks, including Apax Partners, sources said.
Sony initiated the talks, the sources said, partly because it wants worldwide
distribution rights to MGM's vast library that includes the James Bond movies
and countless classics from "Rocky" to "Rain Man."
Sony has long coveted MGM's collection of films, which would provide it with a
steady stream of cash from sales of DVDs and videos that helps offset the high
cost of film and TV production.
MGM confirmed plans early this month to recommend that its board of directors
declare a one-time dividend of $8 a share, which would cost the company about
$1.88 billion if approved.
A deal with Sony, TPG and Providence -- or any other potential suitors -- might
override the dividend payment.
But a source close to MGM said the company would continue to pursue the
payout and would present it to the board of directors as planned.
Kerkorian and his investment firm Tracinda Corp. own about three-quarters of
MGM's shares.
MGM shares closed up $2.10 on the New York Stock Exchange (News -
Websites) at $19.75 after hitting a two-year high of $20.25.
Roy
NEW YORK (Reuters) - Legendary film studio Metro-Goldwyn-Mayer Inc.
(NYSE:MGM - News) is in advanced talks to be bought by Sony Corp.
(Tokyo:6758.T - News) and two buyout firms in a deal that could be worth close
to $5 billion, sources close to the deal said on Wednesday.
The buyout firms, Texas Pacific
Group (News - Websites) and
Providence Equity Partners, are
in discussions with MGM, which
is roughly 74 percent owned by
billionaire financier Kirk
Kerkorian, sources said.
MGM, whose stock jumped 12
percent on the news, has hired
investment bankers at Goldman
Sachs to represent it, the
sources said.
The deal envisions the suitors
buying the entire company, which
would require Kerkorian's approval. Kerkorian, who has owned MGM three
times in its long history that dates back to the silent movie era, is keen to sell,
sources close to the company and industry watchers have said.
"They had talked to Sony (in the past) -- we knew that," said Hal Vogel, a New
York-based fund manager. "They had talked to many people. This is one that
seems to be serious."
Current talks involve the three partners splitting a $1.5 billion cash payment and
borrowing the rest to finance the deal, sources said, adding that negotiations
could fall apart at any time,
The current deal envisages a cash transaction that would pay a premium to
MGM's market capitalization of $4.1 billion before the news, sources said.
MGM, Sony, Texas Pacific Group and Goldman Sachs all declined to comment.
Providence Equity could not immediately be reached. Other firms have also
been in involved in talks, including Apax Partners, sources said.
Sony initiated the talks, the sources said, partly because it wants worldwide
distribution rights to MGM's vast library that includes the James Bond movies
and countless classics from "Rocky" to "Rain Man."
Sony has long coveted MGM's collection of films, which would provide it with a
steady stream of cash from sales of DVDs and videos that helps offset the high
cost of film and TV production.
MGM confirmed plans early this month to recommend that its board of directors
declare a one-time dividend of $8 a share, which would cost the company about
$1.88 billion if approved.
A deal with Sony, TPG and Providence -- or any other potential suitors -- might
override the dividend payment.
But a source close to MGM said the company would continue to pursue the
payout and would present it to the board of directors as planned.
Kerkorian and his investment firm Tracinda Corp. own about three-quarters of
MGM's shares.
MGM shares closed up $2.10 on the New York Stock Exchange (News -
Websites) at $19.75 after hitting a two-year high of $20.25.
Roy
