Sony group raises MGM studio bid to $5 billion

Monday, Sept. 13, 2004 | 9:11 a.m.

BLOOMBERG NEWS

A group of investors led by Sony Corp. raised its offer for Metro-Goldwyn-Mayer Inc., the film studio controlled by billionaire Kirk Kerkorian, to close to $5 billion to thwart a bid for the studio from Time Warner Inc., the Wall Street Journal reported.

The group, whose offer includes assuming $2 billion in debt, raised its bid by 75 cents a share to around $12 from $11.25 a share, the report said, without saying where it got the information. Movies account for about 10 percent of sales at Sony, producer of "Spider-Man."

Keita Sanekata, a spokesman at Tokyo-based Sony, declined to comment on the Wall Street Journal report.

The acquisition would add MGM's library of 4,000 titles, including the "James Bond" and "Rocky" series, to Sony's collection. The purchase may also provide Sony with development rights for future film projects.

Sony and its fellow investors, Texas Pacific Group and Providence Equity Partners, are struggling to reach an agreement on the financing and shape of the offer, the Journal said.

Time Warner has told MGM it will drop its bid if its offer isn't accepted in the next day or two, the report said.

The company is offering $11 a share for MGM, or between $4.5 billion and $4.6 billion, the report said. Time Warner is the world's largest media company.

The purchase would be Time Warner's largest since the company was formed in 2001 when America Online Inc. bought Time Warner Inc. and changed its name to AOL Time Warner Inc. The company last year changed its name back to Time Warner Inc. after having lost $75 billion in market value.

For Sony, the acquisition would follow the merger of Sony's recorded music business earlier this year with Bertelsmann AG. Sony's $3.4 billion purchase of Columbia Pictures in 1989 is the company's biggest acquisition, a Sony spokeswoman said last week.

Sony wrote off 315 billion yen ($2.9 billion) in the year ended March 31, 1995, to account for losses at the pictures group that included abandoned projects and the settlement of contract claims.

Kerkorian, who has a controlling stake in MGM, earlier this month disputed reports saying the film studio may announce an agreement as early as last week. Los Angeles- based MGM said on Sept. 3 that it's "actively continuing" its consideration of strategic alternatives.

Sony's shares rose 2.6 percent to 3,950 yen at the 3 p.m. end of trading on the Tokyo Stock Exchange trading.