Tags: US | Metro | Goldwyn | Mayer | Sale

Lions Gate Pulls Out of Bidding for MGM Studio

Friday, 26 Mar 2010 08:07 AM

Lions Gate Entertainment Corp. has pulled out of the bidding for the beleaguered Metro-Goldwyn-Mayer Inc. movie studio after it was told that its acquisition offer was inadequate, a person with knowledge of the matter said Thursday.

Lions Gate was not prepared to pay more than its bid of between $1.3 billion and $1.4 billion and withdrew from the process rather than raise the offer as requested, said the person, who spoke on condition of anonymity because the bids are meant to be confidential.

The withdrawal means Time Warner Inc.'s bid to acquire the iconic Hollywood studio for $1.5 billion may be MGM's best chance to avoid foreclosure by its creditors.

The other bidder that offered to buy MGM by Monday's deadline was Access Industries, an industrial company with stakes in some media companies run by billionaire founder Len Blavatnik.

Lions Gate was behind the Oscar-winning movie "Precious: Based on the Novel 'Push' By Sapphire." It also owns the TV Guide network and made the "Saw" horror movies and such television shows as "Weeds" and "Nurse Jackie." It will launch its mock superhero movie, "Kick-Ass," next month.

Until now, Lions Gate has expressed interest in buying MGM, known for its roaring lion and classics such as "The Wizard of Oz." Its library of 4,100 movies and TV shows, as well as rights to future James Bond movies, was part of the appeal.

MGM, which a group of private equity firms, Sony Corp. and Comcast Corp. bought for $5 billion in 2005, is selling itself to the highest bidder after a slump in DVD sales and a lack of hits left it unable to manage $3.7 billion in debt and a $250 million credit line.

Representatives for MGM and Time Warner declined to comment. A representative of Access did not immediately respond to a message left seeking comment.

Lions Gate's decision to abandon its pursuit of the 86-year-old studio could relieve some pressure applied on it by activist investor Carl Icahn, who has offered to take over Lions Gate partly to rein in its acquisition activity.

The company appeared to be following its motto of not overpaying for assets. Last week, Lions Gate Vice Chairman Michael Burns told The Associated Press, "We're not giant fans of betting the ranch on anything."

Lions Gate shares rose 4 cents to $6.31 in after-hours trading, after closing up 5 cents at $6.30 — above the $6 per share Icahn is offering to take the company private.

Lions Gate's withdrawal from bidding was reported earlier by The Wall Street Journal.

With Lions Gate out of the running, Time Warner appears to be the most viable candidate. Time Warner has bid for MGM in the past, and it already owns movies that MGM made before 1986. Those titles include "Gone With the Wind" and form the backbone of its Turner Classic Movies cable channel.

A successful bid by Time Warner would also give it complete ownership of two upcoming movies based on "The Hobbit," as MGM is a 50-50 partner in the venture.

Time Warner can also play movies from MGM's extensive remaining library on cable channels such as HBO and TNT.

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Lions Gate Entertainment Corp. has pulled out of the bidding for the beleaguered Metro-Goldwyn-Mayer Inc. movie studio after it was told that its acquisition offer was inadequate, a person with knowledge of the matter said Thursday.Lions Gate was not prepared to pay more...
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2010-07-26
 

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