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Time Warner Pulls Out Of MGM Deal
Way now clear for Sony to snap up ailing giant
14 September 2004 | Written by |
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After months of negotiations both intense and quite frankly far too boring to discuss here previously, the future of MGM – one of the greatest studios in Hollywood history – looks to have been decided today, after Time Warner pulled out of the bidding, leaving the way clear for Sony to snap up the home of the world-famous lion logo.
Sony has now agreed a deal, in principle, to buy Metro-Goldwyn-Mayer for $2.94 billion in cash and $1.95 billion in assumed debt – a price that forced Warners to drop their bid, describing the final price as less than ‘prudent’.
Richard Parsons, Time Warner Chairman and Chief Executive Officer, said: "Although MGM is a valuable asset, we have decided to withdraw our bid. As we pledged to our shareholders, we approach every potential acquisition with strict financial discipline.”
But wait, there’s more. “Unfortunately, Time Warner could not reach agreement with MGM at a price that would have represented a prudent use of our growing financial capacity,” he continued. “We are confident that there are other capital allocation choices that will enable us to continue to build shareholder value."
Despite its reduced output of latter years, MGM is still a hot property due to the number of lucrative franchises in its stable (James Bond, The Pink Panther series, including the forthcoming remake and, erm, Legally Blonde) and its highly valuable DVD back catalogue, including the Rocky series. It also holds the rights to blockbuster-in-waiting The Hobbit, although that movie’s future is uncertain, particularly where Peter Jackson is concerned.
Sony’s offer amounts to $12 a share. Time Warner’s was a clean, all-cash $11 per share. The deal has still to be fully ratified, although Sony have already paid MGM a non-refundable deposit of $150 million, so it’s pretty certain that the I’s will be dotted and the T’s will be crossed. If the deal goes through, it’ll mark the third time that MGM’s billionaire owner, Kirk Kerkorian, has bought or sold the studio. Don’t be surprised if he tries to buy it back on eBay, then. |
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