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Kerkorian is offered =?UNKNOWN?Q?=A32=2E5bn?= cash for MGM

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  • Kerkorian is offered =?UNKNOWN?Q?=A32=2E5bn?= cash for MGM

    Kerkorian is offered £2.5bn cash for MGM
    By Aaron Patrick (Filed: 03/09/2004)

    The Daily Telegraph, UK
    Sept 2 2004

    Metro-Goldwyn-Mayer, the Hollywood studio that filmed The Wizard of
    Oz, The Graduate and Lord of the Rings, has received a cash offer of
    $4.5 billion (£2.5 billion) it emerged yesterday.


    US media group Time Warner offered the sum to MGM controlling
    shareholder Kirk Kerkorian, according to the Wall Street Journal and
    the New York Times. It replaces a previous offer of shares that would
    have left the 87-year-old with a large stake in Time Warner.

    Analysts said the cash offer made Time Warner more competitive with
    the other bidder, Sony, which owns Columbia Pictures and is reported
    to have offered $4.8 billion cash. However, Sony's bid is complicated
    by the fact it relies on two junior backers, both private equity
    firms.

    Time Warner is said to have offered cash in part because it would be
    uncomfortable with Mr Kerkorian as a major shareholder, having
    watched the billionaire sue another of his major investments,
    DaimlerChrysler, for $2 billion.

    Issuing new shares could also be problematical for Time Warner while
    it is the object of an investigation by US regulators into alleged
    accounting irregularities at its America Online division.

    Speculation over the deal has been intense, and MGM took the unusual
    step on Wednesday of issuing a statement denying a Reuters report the
    bidding was nearing $5 billion.

    MGM shares fell sharply after the announcement and were yesterday
    trading slightly above the estimated value of Time Warner's offer.

    MGM is attractive to Sony and Time Warner for its 4,000 movies - the
    largest post-1948 film library - which generate income through
    television reruns, video rentals and DVD sales.
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